RAJIV SHAKDHER,J. - (1.) This is an appeal preferred by the Assessee against the judgement and order of the Income Tax Appellate Tribunal (in short, "the Tribunal") dated 20.12.2012, pertaining to Assessment Year (AY) 2004-2005. 1. 1. The Assessee had challenged the order dated 12.03.2009, passed by the Director of Income Tax (International Taxation) [hereafter referred to DIT], Chennai, under section 263 of the Income Tax Act, 1961 (in short, "the 1961 Act") before the Tribunal. 1. 2. The DIT, vide his order dated 12.03.2009, set aside the assessment made by the Assessing Officer under Section 143(3) of the 1961 Act qua AY 2004-2005. While doing so, the DIT, directed the Assessing Officer to examine as to whether the deduction claimed by the Assessee under Section 80IB of the 1961 Act, was allowable. A further direction was also issued to the Assessing Officer to recompute the deduction under Section 80IB of the 1961 Act, albeit, as per law.
(2.) Before we proceed to adjudicate the substantial questions of law framed in the instant appeal at the time of admission, it would be appropriate to advert to the essential facts, which led to the institution of the present appeal : 2. 1. The Assessee is a company incorporated in New South Wales, Australia, and is a subsidiary of an entity by the name Cairn Energy PLC. Cairn Energy PLC. is a company incorporated in Edinburgh, UK. 2. 2. The India operations are carried out via the Assessee. The Assessee was earlier known as "Cairn Energy India Pty Limited". For its India operations, it, apparently, obtained Reserve Bank of India (RBI) approval in November, 1994. 2. 3. The primary business of the Assessee is to carry on exploration and production of oil and gas in India. For this purpose, it had acquired participating interest in the following oil and gas blocks. The participating interest was granted by the Government of India (GOI) : JUDGEMENT_355_LAWS(MAD)11_2017_1.html 2. 4. The participating interest acquired by the Assessee was taken forward by entering into Production Sharing Contract (in short, "PSC") qua each block with GOI along with other Joint Venturers, who were likewise involved in the exploration and production of oil and gas. In respect of each of the oil and gas blocks referred to above, the Assessee entered into a Joint Operating Agreement (in short, "JOA"), with other Joint Venturers. Furthermore, to carry on exploration and operations, qua each of the blocks, the Assessee entered into, what are known as "Unincorporated Joint Venture Agreements" (in short, "UJV") with other joint venturers. 2. 5. It appears that each PAC and/or JOA, required appointment of an operator in respect of each UJV, and accordingly, the Assessee was appointed as an operator for each of the five (5) UJVs.
(3.) In respect of the period under consideration, the Assessee filed its return on 28.10.2004, whereby, it declared a total income of Rs. 49,16,89,883/-, after claiming deduction under Section 80IB(9) of the 1961 Act. The deduction claimed under Section 80IB(9) was an amount equivalent to Rs. 68,55,77,018/-; being purported profits and gains derived by the subject undertakings from production and refining of mineral oil. 3. 1. According to the Assessee, the deduction, in the sum of Rs. 68,55,77,018/-, claimed by it, was attributable to two (2) gas fields. These being : the Satellite Gas Field, located in the Ravva Joint Venture Block (hereafter referred to as the "SGF unit") and Laxmi Gas Field, situate in CB-OS/2 Joint Venture Block (hereafter referred to as the "LGF unit"). The deduction claimed qua the SGF unit was a sum of Rs. 20,16,10,345/-, while deduction in the sum of Rs. 48,39,66,673/- was claimed in respect of the LGF unit. 3. 2. As per the Assessee, the first commercial production vis-a-vis the SGF unit took place in September, 2001, i.e., the period relevant for AY 2002-2003, while, in the case of the LGF unit, the first commercial production took place in November, 2002, i.e., AY 2003-2004. 3. 3. Evidently, upon a return being filed by the Assessee for AY 2004-2005, a notice under Section 143(2) of the 1961 Act, for scrutiny, was issued on 20.04.2005. 3. 4. This was followed by a questionnaire dated 16.06.2006. Via the said questionnaire, the Assessee was called upon to justify the claim for deduction made under Section 80IB of the 1961 Act. 3. 5. The Assessee submitted a reply dated 03.11.2006. In the reply, the Assessee indicated that it operated, as on 31.03.2004, two (2) eligible tax holidays undertakings, i.e., the SGF unit in the Ravva Joint Venture Block, and the LGF unit in CB-OS/2 Joint Venture Block. Furthermore, the commercial production periods, to which we have made a reference above, were also alluded to in the said reply. Along with the reply, inter alia, copies of the PSCs, of the relevant gas blocks, as also the break-up of exploration and development expenses was also provided. The Assessee made it a point to advert in the reply that the computation of the deduction claimed under Section 80IB of the 1961 Act had been made on the same basis as was done in the preceding AYs. The Chartered Accountant's (CA's) certificate dated 13.10.2004, for each of the two gas fields, i.e., SGF unit and LGF unit, the Audit Report in the prescribed form i.e., 10CCB, and the Profit and Loss Account, were also filed by the Assessee. 3. 6. The Assessing Officer, thereafter, passed an Assessment Order dated 28.12.2006, albeit, under Section 143(3) of the 1961 Act. The Assessing Officer, while, passing the Assessment Order, recomputed the income of the Assessee and pegged it at Rs. 109,59,99,910/-, as against declared income of Rs. 49,16,89,883/-. While, recomputing the income, the Assessing Officer disallowed the claims, inter alia, worth Rs. 8,66,77,608/- under the following heads : (i) provision made with respect to site restoration cost; (ii) purchase of software; and (iii) club membership fee. 3. 7. In so far as deduction claimed under Section 80IB(9) of the 1961 Act was concerned, the same was sustained. 3. 8. The DIT, however, took umbrage to the Assessing Officer sustaining the deduction claimed under Section 80IB(9) of the 1961 Act, by the Assessee, and accordingly, issued a Show Cause Notice dated 21.01.2009 (in short, "SCN"), to the Assessee under Section 263 of the 1961 Act. This notice was, apparently, issued by the DIT on the ground that the order passed by the Assessing Officer on 28.12.2006, under Section 143(3) qua AY 2004-2005, was erroneous, in so far as it was prejudicial to the interest of the Revenue. At this juncture, it would be important to set out that part of the notice, which underlined the reasons for issuing the notice : "..... The assessee company claimed deduction under section 80IB for the assessment year 2004-05 in respect of two units viz. (i) Rava Satellite Gas unit and (ii) Laxmi Gas Field to the extent of Rs. 20,16,10,345 and Rs. 48,39,66,673 respectively. The same was allowed by the assessing officer in the assessment under section 143(3) dated 28-12-2006. The claim of the company for deduction under section 80IB(9) has been computed in accordance with the provisions of section 80IB(13) read with section 80IA(5). Hence it is clear that the action of the assessing officer in computing deduction under section 80IB in the order under section 143(3) dated 28-12-2006 has rendered the assessment as erroneous in so far as it is prejudicial to the interest of revenue. ...." (emphasis is ours) 3. 9. Based on the reason set out above, the DIT indicated to the Assessee that he proposed to revise the assessment order passed by the Assessing Officer. The DIT went on to say that he would pass such an order, as circumstances warrant after making or causing to be made such enquiry, as may be deemed fit in the matter. By the very same notice, an opportunity was granted to the Assessee to put forth its objections in person. The date and time for the said purpose was also intimated. ;