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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 ..... iming. We direct the Assessing Officer to allow assessee s claim in assessment year 2012-13, wherein, the liability got crystallized. This ground is partly allowed. Disallowance of amortization of facility management fee - As per AO and FAA since the entire facility management fee was paid in assessment year 2010-11 for due diligence process for admissibility of the loan facility and it is not connected to the utilization of the loan, therefore, it cannot be amortized over the tenure of the loan - HELD THAT:- We direct the AO to verify the facts relating to assessment year 2010-11 [ 2023 (1) TMI 1284 - ITAT DELHI] and in case such deferment has been allowed in assessment year 2010-11, then he has to allow it in the impugned assessment year. Or else, he is directed to allow the entire expenditure in assessment year 2010-11. Ground is partly allowed. Disallowance of claim of additional depreciation - HELD THAT:- Tribunal in order [ 2023 (1) TMI 1284 - ITAT DELHI] has held that in view of explanation 5 to section 32(1) AO has to compute additional depreciation irrespective of the fact whether the assessee has claimed it or not. Accordingly, the Tribunal has upheld the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me assessee and involve common issues, they have been clubbed together and disposed of in a consolidated order for the sake of convenience. ITA No. 2229/Del/2017 (Assessee s Appeal) AY: 2011-12 3. In ground no. 1, the assessee has challenged disallowance of royalty payment of Rs. 48,58,52,650/- to Oil and Natural Gas Corporation (ONGC). 4. Briefly the facts are, the assessee is a non-resident entity incorporated in Scotland, United Kingdom (UK). As stated, 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 partici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before learned Commissioner (Appeals). However, learned Commissioner (Appeals) endorsed the decision of the Assessing Officer. 7. We have considered rival submissions and perused the materials on record. The facts on record reveal that under the terms of PSC, initially ONGC was paying royalty and the other participants of the joint venture did not consider any part of the royalty paid by ONGC as their cost. However, subsequently, the Government of India in letter dated 26th July, 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facility management fees have been amortized over four years, even though, it was paid entirely in assessment year 2010-11. 11. Though, the assessee furnished its reply justifying the claim, however, the Assessing Officer was not convinced. Ultimately, he disallowed assessee s claim. The assessee contested the aforesaid disallowance before learned first appellate authority. After considering the submission of the assessee in the context of facts and materials on record, learned Commissioner (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 Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.01.2023 has held that in view of explanation 5 to section 32(1) of the Act, the Assessing Officer has to compute additional depreciation irrespective of the fact whether the assessee has claimed it or not. Accordingly, the Tribunal has upheld the decision of the Assessing Officer with regard to allowance of claim of additional depreciation. The aforesaid decision of the Coordinate Bench squarely applies to the facts of the present appeal. Accordingly, we uphold the decision of the departmental authorities 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, we uphold the decision of learned Commissioner (Appeals). Ground raised is dismissed. 26. In ground no. 3, the Revenue has challenged deletion of addition of Rs. 13,75,92,378/-, being part of exploration and development cost in head office expenditure covered under section 44C for the Rajasthan block. 27. Briefly the facts are, while examining the claim of the assessee, the Assessing Officer held that the expenditure claimed is purely on estimate basis without any supporting evidence. Accordingly, he disallowed assessee s claim. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round. 37. We have considered rival submissions and perused the materials on record. It is observed, identical issue was raised by the assessee in ground no. 1 of its appeal in ITA No.2229/Del/2017 decided by us in the earlier part of the order. While deciding the issue, we have directed the Assessing Officer to allow the claim in assessment year 2012-13, as, according to him the expenditure was crystallized in that assessment year. However, since, in the impugned assessment year, learned first appellate authority has declined to admit the additional ground raised by 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 ear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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