19.1 Sub-section (9) of section 80-IB provides for a hundred percent deduction of profits and gains derived from commercial production or refining of mineral oil. For the purpose of this section, the term ‘mineral oil’ does not include petroleum and natural gas, unlike in other sections of the Income-tax Act. The deduction under this 21 sub-section is available to an undertaking for a period of seven consecutive assessment years including the initial assessment year –

(i) in which the commercial production under a production sharing contract has first started; or

(ii) in which the refining of mineral oil has begun.

19.2 A new proviso in sub-section (9) of section 80-IB has been inserted so as to provide that no deduction under this sub-section shall be allowed to an undertaking engaged in refining of mineral oil if it begins refining on or after the 1st day of April, 2009.

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19.3 However, it has also been provided that the deduction under this section will still be available to an undertaking which begins refining on or after the 1st day of April, 2009, if the undertaking fulfils all of the following conditions, namely:-

(i) it is wholly owned by a public sector company or any other company in which a public sector company or companies hold at least forty-nine percent of the voting rights;

(ii) it is notified by the Central Government in this behalf on or before the 31st day of May, 2008; and

(iii) it begins refining not later than the 31st day of March, 2012.

19.4 Vide notification no S.O. 1273(E) dated 30th May, 2008, the Central Government has notified 8 undertakings for the purpose of this sub-section.

19.5 Applicability – This amendment has been made applicable with effect from the 1st day of April, 2008 and will accordingly apply from assessment year 2008-09 and and subsequent assessment years.

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