1/6 itxa-1322-12.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1322 OF 2012 Commissioner of Income-Tax-2 ...Appellant v/s. M/s.Tata Petrodyne Ltd. ...Respondent Mr.Sureshkumar for Appellant. Mr.Dinesh Vyas, Sr.Advocate with Mr.Mandar Vaidya i/b Srihari Iyer for Respondent. ... CORAM : S.C.DHARMADHIKARI & A.A. SAYED, JJ. DATED : 20 NOVEMBER 2014 P.C. This Appeal of Revenue challenges order passed by Income Tax Appellate Tribunal, Mumbai Bench on 11 April 2012 in Appeal of Revenue, being ITA No.5117/Mum/2007 and in two Appeals of Assessee, ITA No5306/Mum and 4804/Mum of 2007. 2. two Assessment Years in question were 2002-03 and 2004-05. 3. cross Appeals were because Assessee was aggrieved by Commissioner's exercise of upholding order of Assessing Officer and that was in relation to exploration Uday Kambli 1/6 ::: Uploaded on - 26/11/2014 ::: Downloaded on - 15/04/2020 13:25:09 ::: 2/6 itxa-1322-12.doc activities carried out by Assessee. Assessee claimed deduction under section 80IB(9) of Income Tax Act, 1961. argument of Revenue was that Assessee was neither engaged in commercial production nor any refining of mineral oil. extraction of said oil, therefore, does not result in any new product or new commodity coming into existence and product sold and one extracted is identical. 4. Tribunal in rejecting ground of Revenue upheld order of Commissioner. It held that activity of Assessee is identical to one undertaken by other Assessee namely Hindustan Oil Exploration Co. Ltd. There was consortium of such Corporations, of which present Assessee was part. In case of Hindustan Oil Exploration Co.Ltd. v/s.CIT in ITA No.179/Mum/2007, on 28 December 2012 Tribunal considered identical issue. It held that activity of extraction could very well fall within term production . That is word used in section 80IB(9)(ii). Tribunal in case of Hindustan Oil relied on judgment of Hon'ble Supreme Court reported in (2004) 271 ITR 331, Commissioner of Income-tax v/s. Sesa Goa Ltd. Hon'ble Supreme Court held that from definition of word Uday Kambli 2/6 ::: Uploaded on - 26/11/2014 ::: Downloaded on - 15/04/2020 13:25:09 ::: 3/6 itxa-1322-12.doc `production', it has to follow that mining activity for purpose of mineral oil would come into within ambit of word `production', since ore is thing , which is result of human activity or effort. Hon'ble Supreme Court held that extraction and processing of iron ore amounts to production within meaning of word in section 32-A(2)(b)(iii) and consequently Assessee was entitled to benefit of section 32-A(I). Hon'ble Supreme Court's judgment in this case was followed and applied by Tribunal in matter of M/s.Hindustan Oil Exploration Co.Ltd., consortium partner of Assessee. Finding that activity of present Assessee is identical to that of Hindustan Exploration, Tribunal applied ratio in its own order and that of Hon'ble Supreme Court and upheld order of Commissioner of Income-Tax(Appeals) to that extent. We do not see how different view can be taken and on same facts and circumstances. If consortium partner was undertaking identical activity, and was allowed deduction, Tribunal then neither acted perversely nor did it commit any error of law apparent on face of record in following and applying its own order to Assessee before us. Uday Kambli 3/6 ::: Uploaded on - 26/11/2014 ::: Downloaded on - 15/04/2020 13:25:09 ::: 4/6 itxa-1322-12.doc 5. We are surprised that view which is imminently possible and cannot be termed as unreasonable or perverse is being questioned before us by Revenue. It is unfortunate that Revenue officials, often very senior, unmindful of damage that they cause to larger public interest by indulging in fruitless litigations, file frivolous Appeals to this Court and burden this Court unnecessarily. All this is done at cost of public exchequer. We have not been able to stop this trend and despite very harsh criticism and order imposing heavy costs. We do not know reason as to why such course is adopted by Revenue and repeatedly. It is time that Highest Officials in Department enlighten us and make us aware as to how this exercise is carried out and for year to year by Revenue. It is only to bring to notice of Department and hoping that change in regime will bring modification or change in outlook and mindset, that we direct that copy of this order be forwarded by Registrar, High Court, Original Side to Secretary in Department of Revenue, Government of India, Ministry of Finance. 6. We also find that second question and termed as substantial question of law by Revenue is not such. site restoration expenses or abandonment cost was treated as Uday Kambli 4/6 ::: Uploaded on - 26/11/2014 ::: Downloaded on - 15/04/2020 13:25:09 ::: 5/6 itxa-1322-12.doc ascertained liability. same was deleted from computation of book profit under section 115JB. 7. In regard to this claim or deduction as well, Tribunal in para 25 of impugned order referred to explanation of Assessee before Assessing Officer that as per terms and conditions of Production sharing contract, it is under obligation that on expiry or termination of contract to remove all its equipments and installations from contract area as well as perform necessary site restoration, operation or process. This is in accordance with International Petroleum Practices. Such explanation of Assessee was supported by independent finding and carried out by Institute of Oil and Gas Production Technology. It is in these circumstances, and holding that explanation of this institute is in accordance with view and guidelines issued by Chartered Accountants of India that Tribunal upheld order of Commissioner even on this issue. 8. Therefore, it is only to highlight as to how Revenue questions and repeatedly, such possible conclusion that we referred to these facts and circumstances regarding this Assessee in detail. This is one more claim or question and which is raised before us. Uday Kambli 5/6 ::: Uploaded on - 26/11/2014 ::: Downloaded on - 15/04/2020 13:25:09 ::: 6/6 itxa-1322-12.doc Even this cannot be said to be substantial question of law as Tribunal's view and that of Commissioner relying on above material can hardly be termed as perverse. 9. As result of above discussion, and finding that only two questions are not substantial questions of law, that we proceed to dismiss this Appeal. Ordinarily we would have been justified in imposing heavy costs, but finding that this is fit case to bring to notice of higher officials in Department, act of Revenue officials, particularly in Bombay area, and hoping that there would change hereafter that we do not impose costs. We clarify, however,that if no substantial change is noticed by us hereafter, such order would follow imposition of heavy costs and which would be visited with remarks and comments on conduct of individual official. Such costs can also be then visited on and recovered from these officials. We hope that this much is enough for purpose of seeking some enlightenment from higher officials. (A.A. SAYED, J.) (S.C.DHARMADHIKARI,J.) Uday Kambli 6/6 ::: Uploaded on - 26/11/2014 ::: Downloaded on - 15/04/2020 13:25:09 ::: Commissioner of Income-tax-2 v. Tata Petrodyne Ltd