2023 (6) TMI 1303 - AT - Income Tax

Additional depreciation u/s 32(1)(iia), after giving effect to the respective earlier assessment year, despite not claimed by the assessee - HELD THAT - We find that identical issue came up for adjudication before the Tribunal in assessee s own case for A.Ys. 2013-14 and 2014-15 wherein the Coordinate Bench vide its order 2023 (1) TMI 1284 - ITAT DELHI has disallowed the assessee s claim by holding the additional claim as mandatory under Explanation 5 to Section 32(1)(iia) - AO has rightly allowed the additional depreciation in this case even without its claim by the assessee. The appeal of the assessee on this ground is dismissed. TDS on exploration development expenditure - addition u/s 40(i)(ia) - CIT(A) deleted the addition - HELD THAT - As decided in own case 2023 (1) TMI 1284 - ITAT DELHI CIT(A) has categorically held that the assessee (CEHL) has furnished tax audit report of the operator CEIL perusal of which shows that TDS requirement have been duly complied with the operator. hence, the disallowance made by the AO on account of exploration development expenditure per se and on account of infraction of provisions of Section 40(a)(ia) are liable to be deleted. The order of the Id. CIT(A) on this ground is affirmed. Disallowance of time cost expenses - Ground stood allowed by CIT(A) - HELD THAT - As in own case 2023 (1) TMI 1284 - ITAT DELHI as affirmed the CIT(A) s order in allowed the assessee s claim of time cost expenses, inter alia, by observing that for making a disallowance under section 40A of the Act, the onus is on the AO to establish that the payments made by the assessee were excessive and unreasonable. In the present case, the AO made disallowances without discussing even the nature of expenses and its reasonableness. Hence, the disallowance proposed to be made is bad in law and deserves to be deleted. Ergo, the decision of the Ld. CIT(A) is hereby affirmed. Disallowance of over head expenditure - addition allowed by CIT(A) - HELD THAT - We find that identical issue came up in assessee s own case 2023 (1) TMI 1284 - ITAT DELHI affirmed the CIT(A) s order in allowed the assessee s claim of overhead expenditure as stating that AO has not given the reasoning as to how these expenses are hit by the provisions of section 44C and has That the AO has not given the reasoning as to how these expenses are hit by the provisions of section 44C and has simply disallowed these expenses on the basis of the stand taken by the Assessing Officer in earlier assessment years. Revenue appeal dismissed.

Summary

Issues Involved:
1. Allowance of additional depreciation under Section 32(1)(iia) of the Income Tax Act.
2. Allowance of exploration and development expenditure under Section 40(a)(i) and 40(a)(ia) of the Income Tax Act.
3. Allowance of time cost expenses.
4. Allowance of parent company overhead expenditure.

Summary:

Issue 1: Additional Depreciation under Section 32(1)(iia)
The Tribunal addressed the issue of additional depreciation claimed by the assessee for AYs 2015-16 and 2016-17. The assessee argued that the additional depreciation should not be mandatory under Explanation 5 to Section 32(1). However, the Tribunal upheld the CIT(A)'s decision, which was consistent with the Tribunal's earlier ruling for AYs 2013-14 and 2014-15, stating that the additional depreciation is mandatory under Explanation 5 to Section 32(1). The Tribunal concluded that the CIT(A) correctly allowed the additional depreciation even though it was not claimed by the assessee. Consequently, the appeals of the assessee on this ground were dismissed.

Issue 2: Exploration and Development Expenditure under Section 40(a)(i) and 40(a)(ia)
The Tribunal reviewed the disallowance of exploration and development expenditure by the AO, which was allowed by the CIT(A). The Tribunal noted that the issue had been previously adjudicated in favor of the assessee for AYs 2010-11, 2013-14, and 2014-15. The Tribunal affirmed the CIT(A)'s decision, which held that the operator (CEIL) complied with TDS provisions and that the expenses were allowable as they were incurred solely for petroleum operations. The Tribunal found no reason to interfere with the CIT(A)'s order, thus dismissing the Revenue's appeals on this ground.

Issue 3: Time Cost Expenses
The Tribunal addressed the disallowance of time cost expenses by the AO, which was allowed by the CIT(A). The Tribunal referred to its previous decision for AYs 2010-11, 2013-14, and 2014-15, where it was held that the AO did not establish that the payments were excessive or unreasonable. The Tribunal affirmed the CIT(A)'s decision, which allowed the assessee's claim of time cost expenses, and dismissed the Revenue's appeals on this ground.

Issue 4: Parent Company Overhead Expenditure
The Tribunal considered the disallowance of parent company overhead expenditure by the AO, which was allowed by the CIT(A). The Tribunal referred to its earlier ruling for AYs 2010-11, 2013-14, and 2014-15, where it was held that Section 44C did not apply to these expenses and they were otherwise allowable as deductions. The Tribunal found no infirmity in the CIT(A)'s order allowing the parent company overheads and dismissed the Revenue's appeals on this ground.

Conclusion
All appeals preferred by the assessee and the Revenue were dismissed. The Tribunal affirmed the CIT(A)'s orders for AYs 2015-16 and 2016-17 on all issues in question.