JEKPL PVT. LTD. (ERSTWHILE JUBILANT ENERGY (KHARSANG) PVT LTD),NOIDA vs. DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI, NEW DELHI

Both the appeals of the assessee are revolving around common ground and hence for the purposes of adjudication were heard together and are being disposed by this common order. The facts in are being considered for the purpose of this order and since the same are identical to also.

At the outset, ld. Counsel for the assessee submitted that there has been a delay in for AY 2010-11 of 1565 days and in AY 2011-12 of 2977 days. The assessee invited out attention to the detailed justification filed vide its application dated 20.06.2024 requesting for condonation of delay. In brief, the delay has been attributable to pendency of assessee company before the NCLT as well as the issues concerning interpretation and application of deduction u/s 80IB(9) of the Act qua the amendments made therein. The assessee accordingly pleaded for condonation of delay. The ld. Sr. DR did not pose any serious objection to the impugned request of the assessee. We are conscious of the fact that no litigant benefits by delaying its matters. Upon consideration, we are of the considered view that the assessee had sufficient justified reasons contributing to the delay. Accordingly, we condone the delay in and 3250 (supra) and proceed to adjudicate these appeals.

The only issue raised in through its grounds of appeals is regarding the admissibility of appellant’s claim of deduction u/s 80IB(9) of the Act. Before proceeding further, we would like to briefly recapitulate the factual matrix of the case. The applicant company is engaged in the business of exploration and production of petroleum crude and natural gas collectively referred as mineral oil. During the year under consideration, the assessee was known as Jubilant Energy (Kharsang) Private Limited, and was managed by its erstwhile management. The applicant holds 25% participating interest in the Production Sharing Contract (PSC' dated 16" June 1995, entered into with Government of India along with other companies, with respect to Kharsang Oil Block which is located and situated in Arunachal Pradesh. Kharsang Oil Block has been on commercial production of mineral oils since the date of signing of the PSC. For the year under consideration being AY 2010-11, Kharsang block had 56 operating wells out of which 36 wells were drilled and completed during the pre-PSC period (known as Old Wells) and remaining 20 wells (known as New Wells) were drilled and completed during the financial year 2005-06 and 2008-09.

The ld. Counsel submitted that among the total 20 New Wells, 5 wells were drilled and completed during the financial year 2005-06 and other 15 wells were drilled and completed in FY 2008-09. In respect of the above said new wells which was drilled and completed during the financial year 2005-06, the assessee had claimed deduction under section 80IB (9) of the Act w.e.f. assessment year Page 3 of 10 2006-07 being initial year and thereafter upto assessment year 2009-10. The new wells which were drilled and completed during the financial year 2008-09 was never claimed as deduction under section 80 IB (9) of the Act. For the year under consideration AY 2010-11, though the eligible period of seven years for claim of deduction under section 80IB(9) of the Act in respect of New Wells had not expired, the erstwhile management did not claim deduction under that section in the return of income. The said action of the erstwhile management was based on the belief that after insertion/ substitution of Explanation in section 80IB(9) of the Act vide Finance (No. 2) Act, 2009 w.r.e.f 1.4.2000, all blocks licensed under a single contract through NELP or through state or central government was to be considered as a single undertaking'. Considering that the period of seven years counted from drilling of first well (including Old Wells) in block has expired, the company did not claim deduction under section 80IB (9) of the Act. The ld. Counsel submitted that the issue of allowability of deduction under section 80IB (9) of the Act by treating each well as separate undertaking is covered in favour of the applicant as explained hereunder. The retrospective insertion of Explanation to section 801B(9) of the Act was held as unconstitutional in the case of Niko Resource Ltd vs. UOI: [2015] 374 ITR 369 (Gujarat) dated 26.03.2015 by the Hon’ble Gujarat High Court. The ld. Counsel argued that the New Wells in respect of which drilling was completed and commercial production was commenced during the financial year 2005-06 and 2008-09 (prior to amendment),

Page 4 of 10 the deduction shall be available for seven consecutive assessment years, which includes the year under consideration (i.e. AY 2010-11).

The ld. Counsel submitted that its claim on similar lines has been allowed by the decision of this Tribunal appellant's own case for Assessment year 2008- 09- in vide order dated 30.12.2016-Revenue's appeal in closed by the Delhi High Court vide its order dated 05.09.2023 and Assessment year 2009-10- in vide order dated 27.03.2023. It was further argued that Claims of deduction of the appellant in assessment years 2006-07 and 2007-08 have not been disputed by the Revenue.

Per Contra, the ld. Sr. DR placed reliance upon the orders of the lower authorities.

We have heard rival submissions in the light of materials available on records. As regards the issue of retrospective insertion of explanation to section 80IB(9) is concerned, the same has been held unconstitutional by the Hon’ble Gujarat High Court in its decision in Niko Resource Ltd. (supra). It is also an undisputed facts on record that the Revenue has not disputed the Claims of deduction of the appellant in assessment years 2006-07 and 2007-08. We have also noted that an Hon’ble Co-ordinate Bench of this Tribunal in its decision in assessee’s case for AY 2008-09 and 2009-10 vide and has held the admissibility of claim of deduction u/s 80IB(9) in assessee’s favour. Thus, it was held

1. Page 5 of 10 “……..9. We have duly considered the rival contentions and gone through the record carefully. There is no dispute with regard to the fact that assessee basically entitled for deduction u/s 80 IB (9). It can claim deduction for a period of 7 years consecutively starting from the year in which production has been started. The assessee has already commenced production in five wells in AY 2006-07, it has claimed deduction of u/s 80 IB (9) in AY 2006-07 and 2007- 08. The deduction was allowed to the assessee in both years. The deduction has been disallowed in the present assessment year only on the strength of retrospective amendment carried out in section 80 IB (9) by introduction of the explanation to this section. Thus, if the explanation is to be read in the section as has been done by the revenue authority below and its manner has to be considered in the light of assessing officer has construed then assessee will not be entitled for the deduction but on the strength of Hon'ble Gujrat High Court's decision if this explanation is being excluded then there is no dispute with regard to the facts that the assessee fulfill all other conditions for claiming the deduction u/s 80 IB (9). The Hon'ble Gujrat High Court has quashed the explanation meaning thereby it is no more on the statute book. The concluding paragraph of the High Court' judgment read as under:- “62. For the reasons given above, we are of the considered opinion that the amendment made in Section 80-IB(9) by adding an Explanation was not clarificatory, declaratory, curative or made "small repair" in the Act, but on the contrary takes away the accrued and vested right of the Petitioner which had. matured after/ the judgments of ITAT, therefore, the, Explanation added by Finance (No.2) 2009 was a substantive law. We have no hesitation to hold that the Explanation added to Section 80-IB(9) by Finance Act (No.2) of 2009: is clearly unconstitutional, violative of Article 14 of the Constitution of India and is liable to be struck down.

Therefore, for the reasons given above, we are of the considered opinion that the Explanation added to Section 80-IB (9) by amendment is substantive law and could not apply retrospectively. The Explanation added to Section 80-IB(9) breaches the rule of law Page 6 of 10 and is arbitrary being violative of Article 14 of the Constitution of India is struck down.

In the result, both the writ petitions succeed and are allowed. The Explanation to Section 80-IB(9) of the Act is held to be ultra vires to-Article 14 of the Constitution of India. Rule is made absolute. Parties to bear their own costs. After this judgment was pronounced, Mr. Mihir Joshi, learned Senior Coursel assisted by Mr. Nitin Mehta and /Mr. Sudhir Mehta, learned counsel appearing for respondent No.2 as well as Mr. Shakeel A. Qureshi have prayed that the operation of this judgment be stayed for a period of one month. We do not find any justification to stay our judgment. The oral request made by learned counsel for the respondents is rejected. (V.M.SAHAI, ACJ.) (R.P.DHOLARIA, J.) 10. In view of the above discussion, we allow the appeal of the assessee and direct the assessing officer to grant deduction u/s 80IB (9) of the Income Tax Act……”

In view of the above decision of the Hon’ble Co-ordinate Bench in assessee’s own case, and as well as its confirmation by the Hon’ble Delhi High Court, there is no case made out to deny the appellant’s claim of deduction u/s 80IB(9) of the Act. The ld. Counsel for the assessee has proposed that the matter may be remitted back to the ld. AO for consideration of allowance of its claim of deduction u/s 80IB(9) of the Act on the lines of the ratio laid down by the Hon’ble Co-ordinate Bench in assessee’s own case (supra). Accordingly, in respectful compliance to the said decision as also for the purposes of consistency, we set- aside the order of the lower authorities and direct the ld. AO to consider allowance of assessee’s claim of deduction duly considering the decision of Hon’ble Co- Page 7 of 10 ordinate Bench in assessee’s own case for AYs 2008-09 and 2009-10 (supra). Due opportunity of being heard shall be given to assessee before adjudicating the matter by way of a speaking order. All the grounds of appeal raised by the assessee are therefore allowed for statistical purposes.

In the result, appeal of the assessee for is allowed for statistical purposes.

As admitted by both the parties the facts of are identical. So being the case the decision therein would apply mutatis mutandis to this appeal also. Accordingly, we direct the ld. AO to consider allowance of assessee’s claim of deduction duly considering the decision of Hon’ble Co-ordinate Bench in assessee’s own case for AYs 2008-09 and 2009-10 (supra). All the grounds of appeal raised by the assessee are therefore allowed for statistical purposes.

Finally, both the appeals of the assessee are allowed for statistical purposes.