Allowability of depreciation on participatory right in the nature of license

This article summarizes a recent ruling of the Delhi Income Tax Appellate Tribunal (ITAT) in the case of M/s ONGC Videsh Ltd. (Taxpayer) [2009-TIOL-758-ITAT-DEL] on the issue of allow ability of depreciation on participatory right to carry out the hydrocarbon operations, acquired by the Taxpayer, pursuant to a Production Sharing Arrangement (PSA). The ITAT held that the participatory right acquired by the Taxpayer was in the nature of asset, in the form of ‘license’ i.e. license to have an access and to carry out exploration, development and production of hydrocarbon operations. Co...