Joshi Technologies International Inc India Projects Vs ACIT (ITAT Ahmedabad)
Oil-well deductions upheld again: ITAT Ahmedabad allows 80IB(9), higher depreciation & TP relief; bogus donation claim rejected
Ahmedabad ITAT partly allowed the Assessee’s appeals involving a bouquet of long-standing issues in the oil exploration sector.
On the core issue of deduction u/s 80IB(9), the Tribunal reiterated that each oil well constitutes a separate undertaking, and profits of each well are independently eligible for deduction. Following binding precedents in the Assessee’s own case and the Gujarat High Court decision in Niko Resources Ltd., the ITAT rejected Revenue’s attempt to apply the Explanation to section 80IB(9) retrospectively and allowed the deduction for all three years.
The Tribunal also allowed depreciation on goodwill u/s 32, holding that participating interest acquired in a joint venture constitutes a commercial right, relying on Smifs Securities Ltd. and earlier years’ orders in the Assessee’s own case. Further, higher depreciation at 60% on oil-well & oil-field equipment was allowed, the issue having attained finality up to the Supreme Court in earlier years. On the same reasoning, additional depreciation u/s 32(1)(iia) was also granted, holding that extraction of mineral oil amounts to manufacture/production.
On the transfer pricing issue, the ITAT deleted the ALP adjustment of ₹35.19 lakh, holding that the TPO erred in determining ALP at “Nil” in respect of overhead charges recovered as per the Production Sharing Contract (PSC). The Tribunal held that PSC is a code in itself, the issue was consistently accepted in past and future years, and the TPO cannot question commercial expediency or re-characterise the transaction.
