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TMI Blog2023 (9) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... tated, assessee is engaged in business of exploration, development and production of hydrocarbons. For the purpose of such business activity, the assessee acquired 50% participating interest in the exploration, development and production of oil and natural gas at a block located in Rajasthan, with the approval of Government of India. Along with ONGC, another Indian entity, i.e. Cairn Energy India Pty Ltd. (CEIPL) were the other partners in the block and the CEIPL was the operator of the contract area under the Production Sharing Contract (PSC) entered between the parties. As stated, subsequently, ONGC in terms of PAC exercised its option to acquire 30% interest in the Rajasthan block. Accordingly, revised participating interest in the block was carved out. In terms of the contract, all activities, such as, seismic acquisition & survey, geological and geophysical studies, drilling of wells etc. for the exploration and development of the area are undertaken by the operator. Whereas, the assessee as well as ONGC contributed their shares in proportion of their respective participating interests in the expenditure. The commercial production from the block commenced w.e.f. 29th August, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, 2011 clarified that the royalty so paid by ONGC will be part of cost of petroleum and will be the cost recoverable from all the joint venture participants in proportion to their interests. In terms of the letter of the Government of India, the assessee treated the amount in dispute as the cost recoverable and netted off against the revenue. The Assessing officer held that since the payment of royalty has accrued in assessment year 2010-11 as per mercantile system of account, it has to be allowed in assessment year 2010-11. Further, he held that the liability got crystallized by virtue of Government of India letter dated 26th July, 2011, falling in financial year 2011-12 relevant to assessment year 2012-13. Therefore, it cannot be allowed in the impugned assessment year. From the observations of learned first appellate authority in para 17.1 and 17.2, it is very much clear that he has endorsed the view of the Assessing Officer by holding that the claim could have been allowed either in assessment year 2010-11 on accrual basis or in assessment year 2012-13, wherein, the liability got crystallized. Thus, from the aforesaid observations of the departmental authorities, it is very m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner (Appeals) upheld the decision of Assessing Officer. 12. We have considered rival submissions and perused the materials on record. Before us, learned counsel appearing for the assessee submitted that the Assessing Officer, in fact, has accepted assessee's claim of deferment/amortization in assessment year 2010-11 in respect of part of the expenditure. Thus, he submitted, there is no reason to disallow assessee's claim in the impugned assessment year. Without prejudice, he submitted, if the departmental authorities are of the view that the entire expenditure having been incurred in financial year 2009-10 relevant to assessment year 2010-11 has to be allowed in that assessment year, the Assessing Officer may be directed to allow the expenditure in assessment year 2010-11. 13. Learned Departmental Representative relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 14. We have considered rival submissions and perused the materials on record. From the observations of the Assessing Officer and learned first appellate authority, it is crystal clear that they have not disputed the incurring of the expenditure by the assessee. They are of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties on the issue. Ground raised is dismissed. 20. In the result, appeal is partly allowed. ITA No. 2249/Del/2017 (Revenue's Appeal) AY: 2011-12 18. In ground no. 1, the Revenue has challenged the deletion of addition expenses on exploration and development amounting to Rs. 416,08,19,616/- for alleged non-deduction of tax under sections 40(a)(i)/40(a)(ia) of the Act. 22. Briefly the facts are, in course of assessment proceeding, the Assessing Officer noticed that the assessee has claimed an amount of Rs. 416,08,19,616/- as allowable exploration and development expenditure for incurring expenses for geological studies, drilling, processing of data, general administrative overheads etc. After calling for necessary details for expenses and examining them, the Assessing Officer observed that the assessee has failed to deduct tax at source under sections 40(a)(i)/40(a)(ia) of the Act. Thus, alleging non-deduction of tax at source, the Assessing Officer disallowed the expenses. While doing so, he relied upon the assessment orders passed for assessment years 2009-10 and 2010-11. While deciding the issue in appeal, learned Commissioner (Appeals), having found that similar disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim. However, while examining the issue in appeal, learned Commissioner (Appeals) allowed assessee's claim by following the decision taken by his predecessor in assessment year 2010-11. 28. Before us, the parties have agreed that the issue is squarely covered by the decisions of the Tribunal in assessment years 2010-11, 2013-14, 2014-15, 2015-16 and 2016-17. We find, while deciding identical issue in assessee's own case in assessment years, noted above, the Tribunal has upheld the decision of learned Commissioner (Appeals) in deleting the disallowance. Facts being identical, respectfully following the decision of the Coordinate Benches, we uphold the deletion of disallowance. Ground is dismissed. 29. In the result, appeal is dismissed. ITA No. 7028/Del/2019 (Assessee's Appeal) AY: 2012-13 30. In ground nos. 1 and 2, the assessee has challenged the disallowance of exploration and development expenditure amounting to Rs. 358,31,72,379/- for alleged non-deduction of tax at source under section 40(a)(i)/40(a)(ia) of the Act. The issue raised in this ground is identical to the issue raised in ground no. 1 of Revenue's appeal in ITA No. 2249/Del/2017 decided by us in the earlier pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, we restore the issue to the Assessing Office for examining assessee's claim in the light of our direction in ground no. 1 of assessee's appeal in ITA No. 2229/Del/2017. Ground is allowed for statistical purposes. 38. In the result, the appeal is partly allowed. ITA No.7126/Del/2019 (Revenue's Appeal) AY: 2012-13 39. In ground no. 1, the Revenue has raised the issue of deletion of disallowance of exploration and development expenses amounting to Rs. 182,71,55,310/-. The issue raised is identical to the issue raised in ground no. 2 of ITA No. 2249/Del/2017 decided by us in the earlier part of the order. Following our decision therein, we uphold the order of learned Commissioner (Appeals) on the issue. Ground raised is dismissed. 40. The issue raised in ground no. 2 relates to deletion of disallowance of head office expenses claimed under section 44C of the Act. This issue is identical to the issue raised in ground no. 3 of ITA No. 2249/Del/2017 decided by us in the earlier part of the order. Following our decision therein, we uphold the order of learned Commissioner (Appeals) on this issue by dismissing the ground raised. 41. In the result, the appeal is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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