RELIANCE INDUSTRIES LTD, MUMBAI V. CIT, MUMBAI

ITA 3212/MUM/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1883 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MADHUR AGGRWAL
• Keywords: Capital asset; Revision of order; Depreciation
• Section: 143(3); 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3212/MUM/2015 ASSESSMENT YEAR: 2010-11 RELIANCE INDUSTRIES LIMITED, 3 RD FLOOR, MAKER CHAMBER-IV, 222, NARIMAN POINT, MUMBAI [PAN : A AAC R 5055K ] VS. COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT, 29 TH FLOOR, CENTER NO. 1, WORLD TRADE CENTRE, CUFFE PARADE, MUMBAI ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI MADHUR AGGR WAL RESPONDENT BY : SHRI AJAY KUMAR, CIT - DR DATE OF HEARING : 13 - 11 - 201 8 DATE OF PRONOUNCEMENT : - 16 - 11 - 201 8 O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(LTU)-MUMBAI , REVISING THE ASSESSMENT U/S. 263 OF THE INCOME TAX ACT, 1961 [HEREIN AFTER REFERRED TO AS ACT] FOR THE AY. 2010-11, OR DER DATED 31-03-2015. THE ASSESSMENT WAS FRAMED BY THE ADDL.C IT(LTU), MUMBAI, U/S. 143(3) READ WITH SECTION 144C(3) OF TH E ACT FOR THE AY. 2010-11 VIDE ORDER DT. 25-03-2013. ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 2 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE ASSESSEE HAS RAISED NINE GROUNDS BUT NOW HE STATED THAT THE ASSESSEE WANTS TO WITHDRAW GROUND NOS. 1 TO 6 AND G ROUND NOS. 8 & 9. LD. COUNSEL FOR THE ASSESSEE STATED THAT HE HAS INSTRUCTIONS FROM THE ASSESSEE AND A LETTER IN THIS RESPECT WAS FILED DATED 12-11-2018, WHEREIN IT WAS STATED AS UN DER: THE ABOVE APPEAL HAS BEEN FIXED FOR HEARING ON 13. 11.2018 BEFORE YOUR HONOUR. IN THIS REGARD, WE RESPECTFULLY SUBMIT THAT WE WISH TO WITHDRAW GROUND NUMBER 1 TO 6 AND GROUND NUMBER 8 OF THE ABOVE APPE AL. WE REGRET FOR THE INCONVENIENCE CAUSED DUE TO THE A FORESAID REQUEST. 2.1. IN VIEW OF THE ABOVE, LD. COUNSEL STATED THAT ONLY EFFECTIVE GROUND REMAINS IS GROUND NO.7. WHEN A QUERY WAS PUT TO LD. COUNSEL THAT IN CASE THE ASSESSEE IS NOT CONTESTING GROUND NOS. 6, 8 & 9, IN THAT EVENTUALITY THE REVISION ORDER ST ANDS AND HE AGREED FOR THAT. HOWEVER, LD. COUNSEL FIRST OF ALL DREW OUR ATTENTION TO THE FOLLOWING GROUND NO.7 WHICH HE WAN TS TO CONTEST ON MERITS: 7. WHILE UPHOLDING THE RIGHT OF YOUR APPELLANT TO CLAIM DEDUCTION U/S. 42 OF THE ACT IN RESPECT OF COSTS PERTAINING TO THE ABORTED OIL BLOCKS WHICH ARE SURRENDERED DURING THE YEAR, THE LEARNED CIT SERIOUSLY ERRED IN CONCLUDING THAT THE EXPENSE OR LOSS OF 101 CRORES. OCCASIONED IN RESPECT OF SUCH ABORTED BLOCKS WHICH WAS ALLOTTED T O THE APPELLANT UNDER PSC WHOLLY DISTINCT FROM PSC IN RESPECT OF KG D WILL GO TO REDUCE ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 3 THE PROFIT DERIVED BY THE APPELLANT FROM QUALIFYING UNDERTAKING (KGD) WHILE COMPUTING PROFIT FROM KGD ELIGIBLE FOR DEDUCT ION U/S. 80IB(9) OF THE ACT, WITHOUT APPRECIATING THAT THE KGD BLOCK LI CENSES TO YOUR APPELLANT UNDER A DISTINCT PSC CONSTITUTES AN INDEP ENDENT AND STANDALONE UNDERTAKING WHICH QUALIFIES FOR DEDUCTIO N U/S. 80IB(9) R.W.S. 80IA(5) OF THE ACT AND THE ELIGIBLE PROFIT T HEREOF CANNOT BE ALLOWED TO BE DILUTED AS A RESULT OF PRESENCE OF PROFIT OR LOSS IN ANY OTHER DISTINCT ACTIVITY OR UNDERTAKING OF THE TAXPAYER. 2.2. LD. COUNSEL ACCORDINGLY DREW OUR ATTENTION TO PARA 1.16.3 OF THE REVISION ORDER PASSED BY THE CIT U/S. 263 OF THE ACT, WHEREIN THE CLAIM OF DEDUCTION U/S. 42(1)(A) OF THE ACT WAS CLAIMED BY ASSESSEE ON ACCOUNT OF EXPENSES INCURRED ON BLOCKS ALLOTTED FOR DISCOVERY AND COMMERCIAL PRODUCTION OF OIL TO THE ASSESSEE IN KG BASIN. THESE BLOCKS WHICH BECOME INF RUCTUOUS OR ABORTIVE EXPLORATION SURRENDERED TO CENTRAL GOVERNM ENT AND ALL THE EXPENSES INCURRED TILL DATE OF SURRENDER ARE CL AIMED AS DEDUCTION U/S.42(1)(A) OF ACT. LD. COUNSEL DREW OUR ATTENTION TO THE FOLLOWING COMPUTATION BY THE CIT: ASSESSMENT YEAR : 2010-2011 : NET PROFIT/LOSS AS PER PROFIT & LOSS 32291262269.21 ADD: DEPRECIATION AS PER PROFIT AND LOSS ACCOUNT 42123217929.00 PROFIT AS P&L ACCOUNT 74414480198.21 LESS: B/F LOSS OF EARLIER YEAR LESS: CLAIM U/S. 42(1)(A) ABORTIVE COST OF OTHER BLOCKS 1010521671.00 ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 4 2.3. LD.COUNSEL TOOK US THROUGH THE TRIBUNALS ORDE R IN ASSESSEES OWN CASE IN IT(TP)A NOS. 1547/MUM/2016 ( AY. 2010- 11); 2733/MUM/2017 (AY. 2011-12) AND 5842/MUM/2017 (AY. 2012-13), DATED 28-09-2018, WHEREIN THE TRIBUNAL VI DE PARAS 9.3 TO 108, ALLOWED THE CLAIM OF ASSESSEE ON MERITS AFT ER CONSIDERING IN DETAIL, WHICH IS AS UNDER: 93. WE HAVE NOTICED EARLIER THAT THE AO HAD HE LD THAT THE EXPENSES RELATING TO UNSUCCESSFUL EXPLORATION IN CONTRACT AR EAS COVERED BY OTHER CONTRACTS ALSO SHOULD BE DEDUCTED FROM THE AGGREGAT E VALUE OF PETROLEUM ALLOCABLE TO THE COMPANY FROM ANY FIELD(S ) IN THE CONTRACT AREA. ACCORDINGLY THE AO HELD THAT THE DEDUCTION O F EXPENSES RELATING TO UNSUCCESSFUL EXPLORATION (ALSO KNOWN AS ABORTED BL OCKS) CLAIMED BY THE ASSESSEE U/S 42(1)(A) IS NOT CORRECT. THE AO A LSO HELD THAT THE ACCUMULATION OF EXPENSES RELATING TO SUCCESSFUL EXP LORATION UNDER THE HEAD INTANGIBLE ASSETS IS ALSO NOT CORRECT. ACCO RDINGLY, THE AO PROCEEDED TO RECAST THE PROFIT AND LOSS ACCOUNT O F KG BASIN UNDERTAKINGS IN ACCORDANCE WITH THE VIEW TAKEN BY H IM, WHICH IS DISCUSSED BY US IN PARAGRAPH 88 (SUPRA) FOR BOTH TH E FINANCIAL YEARS RELEVANT TO AY 2010-11 AND 2011-12. IN THIS PROCES S, (A) THE AO DISALLOWED THE DEPRECIATION CLAIMED BY THE ASSESSEE ON INTANGIBLE ASSETS DISCUSSED ABOVE. (B) THE AO ALSO DEDUCTED THE EXPENSES RELATING TO ABORTED BLOCKS OR UNSUCCESSFUL EXPLORATION (2042.69 CRORES). (C) ALLOWED DEPRECIATION AT THE APPLICABLE RATES PRESCRIBED UNDER INCOME TAX ACT ON THE CAPITAL ASSETS. SINCE ARTICLE/CLAUSE 17.2.4 OF PSC GAVE AN ALTERNAT IVE OPTION TO AMORTISE EXPENSES IN 10 YEARS, THE AO ASKED THE WIL LINGNESS OF THE ASSESSEE TO OPT FOR THE ALTERNATIVE METHODOLOGY. F ROM THE REPLY GIVEN BY THE ASSESSEE, THE AO INFERRED THAT THE ASSESSEE IS OPTING FOR ALTERNATIVE METHOD OF DEDUCTION. ACCORDINGLY THE AO DEDUCTED 1 /10 TH OF EXPENSES REQUIRING AMORTISATION. ACCORDINGLY HE RE-COMPUTED THE PROFIT FROM KG BASIN ACTIVITIES FOR THE FINANCIAL YEAR 2009-10 (AY 2010-11) AND FY 2010-11 (AY 2011-12). THE SAME RESULTED IN LOSS OF RS.3367.38 CRORES ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 5 IN AY 2010-11. FOR AY 2011-12, THE AO ARRIVED AT A PROFIT OF RS.2672.16 CRORES. 94. THE AO ANALYSED THE BREAK-UP OF SALES REVENUE G ENERATED BY THE ASSESSEE FROM VARIOUS PRODUCTS, WHICH IS GIVEN BELO W:- NATURAL GAS - 11,728.99 CRORES CRUDE OIL - 2,817.15 CRORES CONDENSATE - 193.30 CRORES ---------------------------- TOTAL - 14,739.44 CRORES =============== THE AO NOTICED THAT THE DEDUCTION U/S 80IB(9) IS AV AILABLE ONLY FOR PRODUCTION OF MINERAL OIL. THE AO TOOK THE VIEW T HAT THE NATURAL GAS CANNOT BE INCLUDED IN THE DEFINITION OF MINERAL OI L, AS THE WORD OR TERM NATURAL GAS IS NOT MENTIONED IN SEC.80IB(9)(II) O F THE ACT. THE AO ALSO TOOK SUPPORT OF DECISION RENDERED BY HONBLE SUPREM E COURT IN THE CASE OF NAVOPAN INDIA LTD VS. CCE 1994 (73) ELT 679 (SC) AND OTHER DECISIONS OF HONBLE SUPREME COURT TO BUTTRESS HIS VIEWS THAT THE EXEMPTION PROVISIONS SHOULD BE CONSTRUED STRICTLY. THE AO ALSO REFERRED TO THE SPEECH GIVEN BY HONBLE FINANCE MINISTER WHI LE MOVING THE FINANCE BILL 2008 AND ALSO THE NOTES AND CLAUSES OF FINANCE BILL, 2008, WHEREIN A VIEW WAS EXPRESSED THAT THE TERM MINERAL OIL DOES NOT INCLUDE PETROLEUM AND NATURAL GAS FOR THE PURPOSES OF SEC. 80IB. HOWEVER, THE GOVERNMENT DID NOT MAKE ANY AMENDMENT IN 2008 AND LEFT THE QUESTION AS TO WHETHER THE TERM MINERAL O IL WOULD INCLUDE PETROLEUM AND NATURAL GAS OR NOT TO THE WISDOM OF COURTS. 95. THE AO TOOK THE VIEW THAT THE UNDERLYING INTE NT OF THE GOVERNMENT IS THAT THE TERM MINERAL OIL SHOULD NOT INCLUDE N ATURAL GAS. FURTHER THE NATURAL GAS WAS INCLUDED IN THE DEFINITION OF M INERAL OIL SUBSEQUENTLY FOR THOSE NEW PARTICIPANTS WHO ARE PRO SPECTING MINERAL OIL UNDER VIII ROUND OF BIDDING FOR AWARD OF EXPLORATIO N CONTRACTS. THE ASSESSEE HAD PLACED RELIANCE ON THE DECISION RENDER ED BY AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF NIKO RESOURCES LIM ITED VS. DCIT (22 DTR 225), WHEREIN IT WAS HELD THAT MINERAL OIL WOUL D INCLUDE NATURAL GAS ALSO. THE AO, HOWEVER, REFUSED TO FOLLOW THE S AME BY OBSERVING THAT THE INCOME TAX DEPARTMENT HAS NOT ACCEPTED THE DECISION RENDERED BY THE TRIBUNAL BY FILING APPEAL BEFORE THE HIGH CO URT BY THE REVENUE. 96. ACCORDINGLY, THE AO TOOK THE VIEW THAT THE ASS ESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IB(9) OF THE ACT IN RESPECT OF PROFIT ARISING FROM SALE OF NATURAL GAS. HE TOOK THE VIEW THAT THE CRUDE OIL ALONE FALLS UNDER THE DEFINITION OF MINERAL OIL USED IN SEC.80IB(9) OF THE ACT. ACCORDINGLY ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 6 THE AO HELD THAT THE PROFIT RELATING TO SALE OF CRU DE OIL ALONE IS ENTITLED FOR DEDUCTION U/S 80IB(9) OF THE ACT. SINCE THE CRU DE OIL CONSTITUTED 19.11% OF THE TOTAL TURNOVER, THE AO COMPUTED THE P ROFIT ARISING ON SALE OF CRUDE OIL (MINERAL OIL) @ 19.11% OF THE TOTAL PR OFIT FROM THE UNDERTAKING, I.E., 19.11% OF RS.2672.16 CRORES, WHI CH WORKED OUT TO RS.510.72 CRORES. ACCORDINGLY, HE RESTRICTED THE D EDUCTION U/S 80IB(9) OF THE ACT TO RS.510.72 CRORES. 97. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) C ONFIRMED THE DISALLOWANCE OF DEPRECIATION CLAIMED ON INTANGIBLE ASSETS. HENCE THE ASSESSEE IS CONTESTING THE SAID DECISION OF LD CIT( A). 98. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS FO LLOWED THE ACCOUNTING PRACTICE OF ACCUMULATING THE COSTS INCUR RED TILL THE DATE OF COMMERCIAL PRODUCTION AS INTANGIBLE ASSET, SINCE THE PARTICIPATING RIGHT ACQUIRED BY THE ASSESSEE FROM GOVERNMENT OF INDIA IN THE OIL FIELD IS COMMERCIAL RIGHT ELIGIBLE FOR DEPRECIATION. T HE LD A.R SUBMITTED THAT THE AO HAS ALLOWED DEPRECIATION IN AY 2010-11 AND HENCE THE AO SHOULD NOT HAVE TAKEN DIFFERENT VIEW ON THIS MATTER DURING THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THE AO HAS HOWEVER ALLOWED 1/10 TH OF REVENUE EXPENSES AS DEDUCTION AND ALSO ALLOWED DEPRECIATION ON THE CAPITAL ASSETS AT THE APPLICABLE RATES. THE LD A.R CONTENDED THAT THE ASSESSING OFFICER MAY BE DIRECTED TO ALLOW DEPR ECIATION AS CLAIMED BY THE ASSESSEE. 99. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE HAS FOLLOWED ACCOUNTING PRACTICE CONTRARY TO THE METHOD OLOGY PRESCRIBED UNDER PRODUCTION SHARING CONTRACT. THE LD D.R SUBM ITTED THAT THE ASSESSMENT ORDER PASSED IN AY 2010-11 HAS SINCE BEE N REVISED BY LD PR. CIT U/S 263 OF THE ACT. HE SUBMITTED THAT THE AO HAS RIGHTLY COMPUTED THE DEDUCTION AS PROVIDED IN PRODUCTION SH ARING CONTRACT. ACCORDINGLY HE SUBMITTED THAT THE ORDER PASSED BY L D CIT(A) ON THIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE. 100. WE HEARD THE PARTIES ON THIS ISSUE AND PERU SED THE RECORD. WE NOTICE THAT THE ASSESSEE IS REQUIRED TO ACCOUNT FOR AND CLAIM EXPENSES AS PROVIDED IN PRODUCTION SHARING CONTRACT, AS PER THE PROVISIONS OF SEC. 42 OF THE ACT. THE PSC DOES NOT ENVISAGE ACCUMULAT ION OF EXPENSES AND ACCOUNT AS INTANGIBLE ASSETS. IN THAT CASE, THER E IS NO SCOPE FOR ALLOWING DEPRECIATION ON THE INTANGIBLE ASSETS, WHI CH IS NOT PERMITTED UNDER PSC. HENCE THE LD CIT(A) HAS TAKEN THE VIEW THAT THE ASSESSEES ACCOUNTING PRACTICE IS NOT IN ACCORDANCE WITH THE M ETHOD PRESCRIBED IN PSC AND THE AO WAS JUSTIFIED IN DISREGARDING THE SA ME AND IN DISALLOWING THE DEPRECIATION CLAIMED ON THE INTANGI BLE ASSETS. WE HAVE ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 7 EARLIER EXAMINED THE REASONING GIVEN BY THE ASSESSI NG OFFICER FOR DISALLOWING THE CLAIM OF DEPRECIATION. BEFORE US, THE ASSESSEE COULD NOT SHOW HOW THE METHOD OF ACCOUNTING OF ACCUMULATING E XPENSES UNDER THE HEAD INTANGIBLE ASSETS FOLLOWED BY THE ASSESS EE IS PERMITTED UNDER THE PROVISIONS OF THE ACT READ WITH THE PSC. THE ONLY CONTENTION OF THE ASSESSEE IS THAT THE AO HAS ALLOWED DEPRECIA TION IN AY 2010-11 ON INTANGIBLE ASSETS. HOWEVER, THE LD D.R HAS SUBM ITTED THAT THE ASSESSMENT ORDER PASSED FOR AY 2010-11 HAS SINCE BE EN REVISED BY LD PR. CIT US 263 OF THE ACT. IN ANY CASE, THE PRINC IPLE OF RES-JUDICATA SHALL NOT APPLY TO THE INCOME TAX PROCEEDINGS. SIN CE THE ASSESSEE IS REQUIRED TO CLAIM EXPENSES IN ACCORDANCE WITH THE C LAUSES OF PSC, IN OUR VIEW, THE TAX AUTHORITIES ARE JUSTIFIED IN REJECTIN G THE CLAIM OF INTANGIBLE ASSETS AND CONSEQUENTLY REJECTING THE DEPRECIATION CLAIMED THEREON. ACCORDINGLY WE UPHOLD THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 101. WE WOULD LIKE TO PREFER TO DISPOSE OF THE GROUND NO.6 AND 7 URGED BY THE REVENUE AT THIS STAGE, AS THE FACTS RE LATING TO THOSE GROUNDS HAVE BEEN DISCUSSED IN THE PRECEDING PARAGR APHS. IN GROUND NO.6, THE REVENUE IS CHALLENGING THE DECISION OF LD CIT(A) IN HOLDING THAT THE EXPENSES RELATING TO ABORTED BLOCKS NEED NOT BE REDUCED FROM THE PROFIT FROM SALE OF MINERAL OILS FOR COMPUTING DEDU CTION U/S 80IB(9) OF THE ACT, SINCE THE DEDUCTION IS ALLOWABLE FOR EACH UNDERTAKING. 102. WE HAVE NOTICED EARLIER THAT THE AO HAS TA KEN THE VIEW THAT, AFTER THE COMMENCEMENT OF COMMERCIAL PRODUCTION, AL L THE EXPENSES RELATING TO ABORTED BLOCKS (UNSUCCESSFUL BLOCKS) SH OULD BE REDUCED FROM THE PROFIT ARISING FROM SALE OF MINERAL OIL TAKEN F ROM SUCCESSFUL BLOCK. ACCORDINGLY, THE AO REDUCED A SUM OF RS.2042.69 CRO RES FROM THE PROFIT FROM SALE OF MINERAL OIL OBTAINED FROM SUCCESSFUL B LOCK (HERE KG-DWN- 98/3) FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 80I B(9) OF THE ACT. FOR THIS PURPOSE, THE AO PLACED RELIANCE ON THE CLAUSE/ ARTICLE 17.2.2 OF PSC, WHICH PROVIDED THAT ...TO DEDUCT ALL ITS UNSUCCESSFUL EXPLORATION COST S IN CONTRACT AREAS COVERED BY OTHER CONTRACTS FROM THE AGGREGATE VALUE OF PETROLEUM ALLOCABLE TO THE COMPANY FROM ANY FIELD(S ) IN THE CONTRACT AREA (I.E., KG-DWN-98/3 IN THIS CASE) HOWEVER THE ASSESSEE CONTENDED THAT THE DEDUCTION U /S 80IB(9) IS ALLOWED FOR EACH OF THE UNDERTAKING AND IT IS SO PROVIDED IN SEC. 80IA(5), WHICH IS MADE APPLICABLE TO THE DEDUCTION U/S 80IB(9) OF THE ACT. ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 8 103. THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE L D CIT(A), AS DISCUSSED BY LD CIT(A), ARE EXTRACTED BELOW:- 48. ASSESSEE'S SUBMISSIONS: DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE MADE SUBMISSIONS. THEY ARE SUMMARIZED AS UNDER: IN THIS REGARD THE RELEVANT PROVISIONS OF THE ACT A RE REPRODUCED AS UNDER: SECTION 80IA[5) READS UNDER: '(5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSI NESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB -SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INIT IAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DET ERMINATION IS TO BE MADE.' SECTION 801B(9) READS AS UNDER: '(9) THE AMOUNT OF DEDUCTION TO AN UNDERTAKINGSHALL BE HUNDRED PER CENT OF THE PROFITS FOR A PERIOD OF SEVEN CONSE CUTIVE ASSESSMENT YEARS, INCLUDING THE INITIAL ASSESSMENT YEAR, IF SUCH UNDERTAKINGFULFILS ANY OF THE FOLLOWING, NAMELY: (I) . (II) IS LOCATED IN ANY PART OF INDIA AND HAS BEGUN OR BEGINS COMMERCIAL PRODUCTION OF MINERAL OIL ON OR AFTER TH E 1ST DAY OF APRIL, 1997: [PROVIDED THAT THE PROVISIONS OF THIS CLAUSE SHALL NOT APPLY TO BLOCKS LICENSED UNDER A CONTRACT AWARDED AFTER THE 31ST DAY OF MARCH, 2011 UNDER THE NEW EXPLORATION LICENCING POL ICY ANNOUNCED BY THE GOVERNMENT OF INDIA VIDE RESOLUTIO N NO. 0- 19018/22/95-ONG.DO.VL, DATED THE 10TH FEBRUARY, 199 9 OR IN PURSUANCE OF ANY LAW FOR THE TIME BEING IN FORCE OR BY THE CENTRAL OR A STATE GOVERNMENT IN ANY OTHER MANNER;] (III)......];' ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 9 THE ASSESSEE SUBMITTED THAT ON PERUSAL OF SECTION 8 0-IB(9J, IT CAN BE OBSERVED THAT THIS SUB-SECTION PROVIDES FOR GRAN TING DEDUCTION ON THE PROFITS AND GAINS DERIVED FROM 'SUCH - UNDER TAKING',IT IS CLEAR POINTER FOR GRANTING DEDUCTION IN RESPECT OF PROFIT EARNED BY EACH OF SUCH ELIGIBLE UNDERTAKINGS SEPARATELY. ACCORDING TO THE ASSESSEE IN LIGHT OF THE PROVISION S OF SECTION 80- IB(9) R.W.S 80-IA(5) OF THE ACT, THERE IS NO WARRAN T FOR REDUCING THE LOSS OF ONE ELIGIBLE UNDERTAKING FROM THE PROFIT OF THE OTHER ELIGIBLE UNDERTAKING. SUCH AN INTERPRETATION WOULD VIOLATE T HE UNAMBIGUOUS LANGUAGE OF SECTION, WHICH OTHERWISE TA LKS OF GRANTING DEDUCTION IN RESPECT OF THE 'PROFITS AND G AINS DERIVED FROM SUCH UNDERTAKING'. IF WE WERE TO READ THE SECT ION IN A WAY THAT HAS BEEN READ BY THE AO, THEN INSTEAD OF THE P HRASE EXTRACTED IN THE PRECEDING LINE, IT SHOULD HAVE BEE N 'AGGREGATE OF PROFITS AND GAINS DERIVED FROM SUCH UNDERTAKINGS'. THE ASSESSEE HAS PLACED RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT V. CANARA WORKSHOP (P.) LTD.[1986] 161 ITR 320. THE SU PREME COURT IN THIS CASE HELD THAT IN COMPUTING THE PROFITS FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80E, THE LOSS INCURRED BY T HE IN THE MANUFACTURE OF ALLOY STEELS (A PRIORITY INDUSTRY) C OULD NOT BE SET OFF AGAINST THE PROFITS OF THE MANUFACTURE OF AUTOM OBILE ANCILLARIES (ANOTHER PRIORITY INDUSTRY) AND HENCE THE WAS ENTIT LED TO DEDUCTION AT THE SPECIFIED RATE ON THE ENTIRE PROFI TS OF THE AUTOMOBILE PARTS INDUSTRY INCLUDED IN THE TOTAL INC OME WITHOUT DEDUCTING THEREFROM THE LOSS IN THE ALLOY STEEL MAN UFACTURE. THUS IT WAS SUBMITTED BY THE ASSESSEE THAT BY SUBSTITUTI NG THE WORD 'UNDERTAKING' FOR THE WORD 'PRIORITY INDUSTRY' IN T HE AFORESAID SUPREME COURT JUDGMENT, IT CAN BE SAID THAT LOSSES FROM ABORTIVE BLOCKS/ WELLS, CANNOT BE SET OFF AGAINST THE PROFIT DERIVED FROM KGD BLOCK WHICH IS ALSO AN INDEPENDENT UNDERTAKING. FURTHER, RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON 'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. VISAKHA IN DUSTRIES LTD. [2001] 251 ITR 471 WHERE A SIMILAR VIEW WAS TAKEN B Y THE HIGH COURT BY HOLDING THAT THE DEDUCTIONS CONTEMPLATED U NDER SECTION 80HH AND 80-1 ARE TO BE ALLOWED WITH REFERENCE TO T HE PROFITS OF THE PARTICULAR INDUSTRIAL UNDERTAKING AND NOT WITH REFERENCE TO THE TOTAL INCOME OF THE AND THEREFORE LOSS IN ANOTHER U NIT CANNOT BE SET OFF AGAINST THE PROFITS OF ELIGIBLE UNIT. FURTHER, IT WAS SUBMITTED THAT WHILE COMPUTING DEDU CTION U/S.80IB(9) OF THE IT ACT, THE PROVISIONS OF SECTIO N 80IA(5) ARE ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 10 APPLICABLE, WHICH PROVIDE THAT FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION, THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF SUCH ELIGIBLE BUSI NESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE. THE TERM ELI GIBLE BUSINESS HERE WOULD MEANS, PROFITS AND GAINS FROM CONTRACT A REA KGD. THEREFORE, THE LOSSES IN RESPECT OF UNSUCCESSFUL EX PLORATION OF OTHER BLOCKS ARE NOT BE REDUCED WHILE WORKING OUT P ROFITS AND GAINS OF THE ELIGIBLE UNDERTAKING I.E. CONTRACT ARE A KGD. THE ASSESSEE HAS CLAIMED DEDUCTION IN RESPECT OF AB ORTIVE BLOCKS U/S 42(L)(A) OF THE ACT THE PLAIN READING OF SECTION 42(1) IMPLIES FOLLOWIN G CONDITIONS TO BE SATISFIED FOR THE PURPOSE OF ALLOWING DEDUCTION/ ALLOWANCE IN ADDITION TO THE ALLOWANCE ADMISSIBLE IN OTHER SECTI ONS OF THE ACT A. THERE SHOULD BE AN AGREEMENT OF THE PERSON WI TH CENTRAL GOVERNMENT (AND AGREEMENT SHOULD BE LAID ON THE TAB LE OF EACH HOUSE OF THE PARLIAMENT) B. ONLY SUCH ALLOWANCE ARE ALLOWED WHICH ARE SPECIFIED IN THE PSC C. SUCH SPECIFIED ALLOWANCE SHOULD BE IN RELATI ON TO VARIOUS SPECIFIC NATURES AS MENTIONED IN SUB-CLAUSE (A) (B) AND (C). D. SUCH ALLOWANCES SHALL BE COMPUTED AND MADE I N THE MANNER SPECIFIED IN THE PSC. THE AO WHILE COMPUTING DEDUCTION U/S.80LB(9) OF THE ACT IN RESPECT OF KGD UNDERTAKING HAS REDUCED THE AMOUNT O F RS.2042.69 CRORES BEING THE ABORTIVE COST OF WELLS INCURRED IN CONTRACT AREAS OTHER THAN KGD UNDERTAKING. IN DOING SO HE HAS RELIED UPON THE PROVISIONS OF ARTICLE 17 OF THE PSC SIGNED BY THE ASSESSEE WITH THE CENTRAL GOVERNMENT WHICH DEALS WI TH THE COMPUTATION OF PROFITS AND GAINS FOR THE PURPOSE OF INCOME-TAX AND IS NAMED AS 'TAXES, ROYALTIES, RENTAL DUTIES ET C'. THE RELEVANT EXTRACT IS REPRODUCED BELOW. ARTICLE 17.2.2 STATES THAT' A COMPANYSHALL BE ENTIT LED, FOR INCOME TAX PURPOSE ONLY, TO DEDUCT ALL ITS UNSUCCESSFUL EX PLORATION COSTS ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 11 IN CONTRACT AREAS COVERED BY OTHER CONTRACTS FROM T HE AGGREGATE VALUE OF PETROLEUM ALLOCABLE TO THE COMPANY FROM AN Y FIELD(S) IN THE CONTRACT AREA IN THE MANNER AS FOLLOWS: A. UNSUCCESSFUL EXPLORATION COSTS INCURRED IN CON TRACT AREAS OTHER THAN THE CONTRACT AREA WHERE A COMMERCIAL DIS COVERY HAS BEEN MADE UP TO THE DATE OF COMMENCEMENT OF COMMERC IAL PRODUCTION SHALL BE AGGREGATED AND THE COMPANY SHAL L BE ENTITLED TO DEDUCT SUCH COSTS AT THE RATE OF ONE HUNDRED PER CENT (100%) PER ANNUM; B. UNSUCCESSFUL EXPLORATION COSTS INCURRED IN CON TRACT AREAS OTHER THAN THE CONTRACT AREA WHERE A COMMERCIAL DIS COVERY HAS BEEN MADE, AFTER THE COMMENCEMENT OF COMMERCIAL PRO DUCTION, SHALL BE DEDUCTIBLE AT THE RATE OF ONE HUNDRED PER CENT (100%) PER ANNUM OF SUCH COSTS BEGINNING FROM THE YEAR SUCH CO STS ARE INCURRED.' THUS, ON HARMONIOUS READING OF THE AFORESAID PROVIS ION, IT CAN BE CONCLUDED AS FOLLOWS: THE DEDUCTION UNDER ARTICLE 17.2.2 IN RESPECT OF ABORTIVE/UNSUCCESSFUL BLOCKS IS TO BE ALLOWED TO A COMPANYWHILE COMPUTING ITS PROFITS AND GAINS FROM THE BUSINESSOF PETROLEUM OPERATIONS. THUS, THE SAME ARE NOT BE REDUCED FOR T HE PURPOSE OF COMPUTING THE PROFITS OF AN 'UNDERTAKING' ELIGIBLE FOR DEDUCTION U/S80IB OF THE ACT. AS STATED ABOVE, AS PER PROVISIONS OF SECTION 80IB( 13) OF THE ACT, THE PROVISIONS OF SECTION 80IA(5) OF THE ACT ARE AP PLICABLE WHILE COMPUTING THE DEDUCTION UNDER SECTION 80IB(9). SECT ION 80IA(5) OF THE ACT PROVIDES THAT FOR THE PURPOSES OF DETERMINI NG THE QUANTUM OF DEDUCTION, THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE. THUS WHILE COMPUTING THE PR OFITS OF AN 'UNDERTAKING', THE SAME SHALL BE COMPUTED AS IF, SU CH UNDERTAKING WERE THE ONLY SOURCE OF INCOME OF THE A SSESSEE AND HENCE LOSSES OF OTHER UNDERTAKING SHOULD NOT BE ADJUSTED/CONSIDERED WHILE WORKING OUT THE INCOME FR OM SUCH UNDERTAKING. THUS, IN LIGHT OF THE PROVISIONS OF SE CTION 80-IB(9) R.W.S 80-1A(5) OF THE ACT, IT WAS SUBMITTED BY THE ASSESSEE THAT DEDUCTION U/S 42(L)(A) IN RESPECT OF ABORTIVE/UNSUC CESSFUL BLOCKS ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 12 ARE NOT BE REDUCED WHILE COMPUTING THE PROFITS OF T HE UNDERTAKING VIZ: KGD WHICH IS ELIGIBLE FOR DEDUCTION U/S 801B(9 ). 104 AFTER ANALYSING THE FACTS OF THE CASE AND AFT ER CONSIDERING THE CONTENTIONS OF THE ASSESSEE, THE LD CIT(A) DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE EXPENSES RELATING TO ABORTED BLOCKS NEED NOT BE REDUCED FROM THE PROFITS FOR THE PURPOS E OF COMPUTING DEDUCTION U/S 80IB(9) OF THE ACT. THE REVENUE IS A GGRIEVED BY THIS DECISION RENDERED BY LD CIT(A). 105. THE LD D.R SUBMITTED THAT THE PRODUCTION SH ARING CONTRACT SHALL OVERRIDE THE PROVISIONS OF INCOME TAX ACT IN TERMS OF SEC.42 OF THE ACT. THIS IS SO HELD BY HONBLE SUPREME COURT IN T HE CASE OF ENRON OIL & GAS INDIA LTD (2008)(305 ITR 75). HE SUBMITTED T HAT THE ARTICLE/CLAUSE 17.2.2 OF THE PSC PROVIDED FOR DEDUC TION OF EXPENSES RELATING TO ABORTIVE BLOCKS AGAINST THE PROFIT FROM SALE OF MINERAL OIL. ACCORDINGLY HE SUBMITTED THAT THE AO HAS RIGHTLY DE DUCTED RS.2042.69 CRORES RELATING TO ABORTIVE BLOCKS FROM THE PROFIT IN ORDER COMPUTE THE DEDUCTION U/S 80IB(9) OF THE ACT. 106. THE LD A.R, ON THE CONTRARY, SUBMITTED THA T THE CLAUSE/ARTICLE 17.2.2 OF PSC PROVIDES THE MANNER OF COMPUTATION OF PROFIT AT ENTITY LEVEL AND HENCE THE EXPENSES RELATING TO ABORTED BL OCKS ARE REQUIRED TO BE REDUCED FROM THE PROFIT FROM SALE OF MINERAL OIL WHILE COMPUTING PROFIT AT ENTITY LEVEL. HOWEVER CLAUSE/ARTICLE 17.2.5 OF PSC HAS ALSO STATED THAT ALL OTHER PROVISIONS OF INCOME TAX ACT WILL A PPLY. HE SUBMITTED THAT, BY VIRTUE OF SEC.80IB(13) OF THE ACT, THE PRO VISIONS OF SEC. 80IA(5) HAS BEEN MADE APPLICABLE TO THE DEDUCTION ALLOWED U /S 80IB(9) OF THE ACT. AS PER THE PROVISIONS OF SEC. 80IA(5), THE DE DUCTION IS TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS O BTAINED 31 DIFFERENT CONTRACTS FROM GOVERNMENT OF INDIA THROUGH AUCTION PROCESS AND EACH CONTRACT SHOULD BE TREATED AS SEPARATE UNDERTAKING FOR THE PURPOSE OF SEC. 80IB(9) OF THE ACT. HE SUBMITTED THAT THE PRO VISIONS OF SEC.42 AND PSC GOVERNS THE DEDUCTION ALLOWABLE IN RESPECT OF E XPENSES INCURRED ON ABORTED BLOCKS AND SEC.80IA(5) READ WITH ARTICLE/CL AUSE 17.2.5 OF PSC OVERRIDES THE PROVISIONS OF SEC.42 AND PSC. HE FUR THER SUBMITTED THAT THE EXPLANATION GIVEN BELOW SEC.80IB(9) IS CONCERN ED WITH ALL THE BLOCKS LICENSED UNDER A SINGLE CONTRACT. HE SUB MITTED THAT THE EXPENSES RELATING TO ABORTIVE BLOCKS SOUGHT TO BE R EDUCED BY THE AO WERE RELATED TO DIFFERENT CONTRACTS AND HENCE THE A BOVE SAID EXPLANATION GIVEN BELOW SEC.80IB(9) WILL NOT APPLY TO THE INSTANT CASE. ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 13 107. WE HAVE HEARD RIVAL CONTENTIONS ON THIS ISS UE. WE HAVE NOTICED EARLIER THAT THE LD CIT(A) HAS DECIDED THIS ISSUE I N FAVOUR OF THE ASSESSEE BY HOLDING THAT EACH CONTRACT IS A SEPARAT E UNDERTAKING AND HENCE THE EXPENSES RELATING TO ABORTED BLOCKS OF DI FFERENT CONTRACTS CANNOT BE REDUCED FROM THE PROFIT FROM SALE OF MINE RAL OIL OBTAINED FROM ANOTHER CONTRACT. THE OPERATIVE PORTION OF LD CIT( A) ON THIS ISSUE ARE EXTRACTED BELOW:- 49. DECISION: I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUB MISSIONS MADE BY THE ASSESSEE. THE ISSUE FOR CONSIDERATION IS WHE THER COST OF ABORTIVE/UNSUCCESSFUL BLOCKS (OTHER INDEPENDENT UND ERTAKINGS) ARE BE REDUCED WHILE COMPUTING THE PROFITS OF A SUC CESSFUL BLOCK (KGD IN THE ASSESSEE'S CASE WHICH IS INDEPENDENT UN DERTAKING) FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80-IB(9). THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF EXPLORA TION AND PRODUCTION OF MINERAL OIL. THE ASSESSEE WAS AWARDED 31 CONTRACT AREAS UNDER SEPARATE PRODUCTION SHARING CONTRACTS (PSC) SIGNED WITH THE GOVERNMENT OF INDIA. THE ABOVE CONTRACT AREAS WERE AWARDED ON BIDDING IN SEPARATE AUCTION F OR EACH CONTRACT AREA . THERE IS NO DISPUTE THAT FOR THE PURPOSE OF CLAIMING DEDUCTION U/S.80IB [9) OF THE ACT EACH CONTRACT AREA CONSTITUTED AN INDEPENDENT UNDERTAKING . SINCE THE ASSESSEE HAD COMPLIED WITH THE CONDITIONS SPECIFIED U/S 80IB (9) OF THE ACT, IT CLAIMED DEDUCTION OF THE PROFITS AND GAINS OF KG D UNDERTAKING U/S 80-IB(9) OF THE ACT. WHILE COMPUTING THE PROFIT S AND GAINS OF KGD UNDERTAKING FOR THE PURPOSE OF CLAIMING DEDUCTI ON UNDER THE SECTION 80IB(9) OF THE ACT, THE PROVISIONS OF SECTION 80IA(5) ARE APPLICABLE , WHICH PROVIDE THAT FOR THE PURPOSES OF DETERMININ G THE QUANTUM OF DEDUCTION, THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF SUCH ELIGIBLE BUSI NESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE. ACCORDINGLY, THE ASSESSEE HAS CORRECTLY NOT REDUCED THE UNSUCCESSFUL EXPLORATION COST INCURRED IN CONTRACT AREA OTHER THAN KGD, WHICH HAS BEEN MADE IN THE COMPUTAT ION OF INCOME U/S 42(L)(A) AGAINST THE ENTIRE INCOME OF THE ASSESSEE COMPANY WHILE COMPUTING THE BUSINESS INCOM E. THE AO HAS HOWEVER, REJECTED THE ABOVE CLAIM OF THE ASSESSEE AND HAS REDUCED THE AMOUNT OF RS.2042.69 CRORES BEI NG THE ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 14 ABORTIVE COST OF WELLS INCURRED IN CONTRACT AREAS O THER THAN KGD WHILE COMPUTING DEDUCTION U/S.80IB(9) OF THE ACT IN RESPECT OF KGD UNDERTAKING. IN DOING SO, HE HAS RELIED ON THE PROVISIONS OF ARTICLE 17.2.2. OF THE PRODUCTION SHARING CONTRACT (PSC). HOWEVER, ON HARMONIOUS READING OF THE PROVISIONS OF ARTICLE 17 OF THE PSC, IT CAN BE CONCLUDED THAT THE DEDUCTION UNDER ARTICLE 17.2.2 IN RESPECT OF ABORTIVE/UNSUCCESSFUL BLOCKS IS TO BE ALLOWED TO A COMPANY WHILE COMPUTING ITS PROFITS AND GAINS FROM THE BUSI NESS OF PETROLEUM OPERATIONS. THUS, THE SAME ARE NOT BE RED UCED FOR THE PURPOSE OF COMPUTING THE PROFITS OF AN 'UND ERTAKING' ELIGIBLE FOR DEDUCTION U/S 80IB. THUS, THIS GROUND OF APPEAL IS ALLOWED AND AO IS DI RECTED TO COMPUTE THE PROFITS OF KGD UNDERTAKING ON A STANDAL ONE BASIS AS PER THE PROVISIONS OF 80IA(5), FOR THE PURPOSE OF C LAIMING DEDUCTION UNDER THE SECTION 801B(9) OF THE ACT. THE AO IS ACC ORDINGLY, DIRECTED THAT COST IN RESPECT OF ABORTIVE/UNSUCCESS FUL BLOCKS ARE NOT BE REDUCED WHILE COMPUTING THE PROFITS OF THE U NDERTAKING VIZ: KGD WHICH IS ELIGIBLE FOR DEDUCTION U/S 80IB(9). TH IS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 108. WE NOTICE THAT THE ARTICLE/CLAUSE 17.2.2 OF PSC ALLOWS DEDUCTION OF EXPENSES RELATING TO ABORTED BLOCKS AGAINST THE PROFIT ARISING FROM OTHER BLOCKS. IN OUR VIEW, THE ASSESSEE WAS RIGHT IN CONTENDING THAT THE ARTICLE/CLAUSE 17.2.2 WAS CONCERNED WITH THE COMPUT ATION OF INCOME AT ENTITY LEVEL IN TERMS OF SEC.42 OF THE ACT. THE ART ICLE/CLAUSE 17.2.5 OF PSC STATES THAT ALL OTHER PROVISIONS OF INCOME TAX ACT SHALL APPLY. THE PSC DOES NOT DEAL WITH THE DEDUCTION GIVEN U/S 80IB (9) OF THE ACT AND HENCE THE PROVISIONS OF THE ACT SHALL APPLY. HENCE THE DEDUCTION U/S 80IB(9) OF THE ACT HAS TO BE COMPUTED IN TERMS OF S EC.80IB OF THE ACT. SEC. 80IB(13) OF THE ACT PROVIDES THAT THE PROVISIO NS OF SEC. 80IA(5) SHALL APPLY AND UNDER THE PROVISIONS OF SEC.80IA(5) OF TH E ACT, THE PROFITS AND GAINS OF ELIGIBLE BUSINESS, FOR THE PURPOSES OF SEC . 80IB, SHALL BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE. IN VIEW OF THESE PROVISIONS, THE DED UCTION U/S 80IB(9) HAS TO BE COMPUTED AFTER ASCERTAINING PROFITS AND G AINS OF ELIGIBLE BUSINESS IN TERMS OF SEC 80IA(5) OF THE ACT. HENCE THERE IS NO SCOPE TO ADJUST EXPENSES RELATING TO OTHER UNDERTAKINGS WH ILE COMPUTING DEDUCTION U/S 80IB(9) OF THE ACT. HENCE, WE ARE OF THE VIEW THAT THE DECISION RENDERED BY LD CIT(A) DOES NOT CALL FOR AN Y INTERFERENCE AND ACCORDINGLY WE UPHOLD THE SAME. ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 15 2.4. WHEN THIS WAS CONFRONTED TO LD. CIT-DEPARTMENT AL REPRESENTATIVE, HE FAIRLY AGREED THAT ON MERITS, TH E ISSUE IS COVERED IN ASSESSEES OWN CASE CITED SUPRA. AS THE REVENUE COULD NOT POINT OUT ANYTHING, WE ARE OF THE VIEW THAT THE ISSUE ON MERITS IS EXACTLY COVERED ON FACTS. HENCE, TAKING THE CONSISTENT VIEW AND RESPECTFULLY FOLLOWING THE TRIBUNALS ORDE R CITED SUPRA, WE ALLOW THE GROUND NO. 7 RAISED BY ASSESSEE. 3. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DAY OF NOVEMBER, 2018 SD/- SD/- (RAJESH KUMAR) (MAHAV IR SINGH) ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI; DATED: 16 TH NOVEMBER, 2018 TNMM ITA NO.3212/MUM/2015 RELIANCE INDUSTRIES LIMITED 16 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A),MUMBAI 4. THE CIT 5. DR, D BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI