9911796707
TMI Blog2019 (4) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not surrendered its block; rather it had sought for an extension of time to fulfill its contract. 2. Whether in law and on the facts of the instant case, was the Tribunal in error in its interpretation of Section 42(1)(a); that deals with the surrender of an area of exploration and not the relinquishment of the contract as concluded by the Tribunal." 2. Brief facts are as under; RespondentAssessee Hindustan Oil Exploration Company Ltd. is engaged in the business of exploration and extraction of oil. The issue pertains to the assessee's return of income for the year 20082009. The return filed by the assessee for the said assessment year declared NIL income. In the return, the assessee had claimed a deduction of a sum of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and observed as under; "We have heard the rival submissions and perused the material before us. We find that to encourage the oil exploration Government of India introduced a new policy and simultaneously made amendment in the Act, that the assessee had made an application in pursuance of PSC and was allotted area for exploration w.e.f. 16.03.2001, that it was allowed to explore the area for seven years in three phases, that it had informed the BSE that it could not oil in two of the wells, that in the year 2006 Government notified that extension could be granted to the earlier allottees, that vide its application, dated 16.1.2008, the assessee requested for an extension, that the DGHC rejected the application filed by it for extending t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actor shall, after any development area has been designated, relinquished all of the contract area not included within the said development area'.Article30 of PSC (pg. 1.84) deals with termination of contract. It provides 10 circumstances under which the government could terminate the contract. Clearly relinquishment and termination of agreement are two different concepts as per the PSC. In his letter, dated 28.03.2007, the DGHC has informed the assessee that its contract stood relinquished. We would like to reproduce the relevant portion of the letter and same reads as under; "Since PhasellI exploration period is expired on 16.3.2008 and the consortium has not fulfilled the terms laid down for extension as per policy for ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or gains of any business consisting of the prospecting for or extraction or production of mineral oils in relation to which the Central Government has entered into an agreement with any person for the association or participation [of the Central Government or any person authorised by it in such business] (which agreement has been laid on the Table of each House of Parliament), there shall be made in lieu of, or in addition to, the allowances admissible under this Act, such allowances as are specified in the agreement in relation- (a) to expenditure by way of infructuous or abortive-exploration expenses in respect of any area surrendered prior to the beginning of commercial production by the assessee; (b) after the beginning of commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of clause (a) of any expenditure by way of infructuous or abortive exploration expenses in respect of any area surrendered prior to the beginning of the commercial production by the assessee would be admissible. For the applicability of clause (a) of subsection (1), the elements vital are that the expenditure should be infructuous or abortive exploration expenses and that the area should be surrendered prior to beginning of the commercial production by the assessee. In other words, as long as these two requirements are satisfied, the expenditure in question would be recognized as a deduction. The emphasis of this provision is of infructuous or abortive exploration expenses and that there is surrender prior to the beginning of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
