Madras HC Quashes Assessment against Cairn India [Read Judgment]

A division bench of Madras High Court recently invalidated an assessment order against M/s.Cairn India Ltd.

The primary object 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 various oil and gas blocks.

As part of its activities, the assessee entered into various Production Sharing Contract, Joint Operating Agreement and Unincorporated Joint Venture Agreements with other entities joint venturers.

For the year under consideration, the department asked the assessee to justify the claim for deduction made under Section 80IB of the Income Tax Act 1961. Later, assessment was passed against the assessee making additions under various heads.

Assessee, being failed to secure relief from the ITAT, approached the High Court.

While answering most of the questions in favour of the assessee, the division bench comprising of Justices Rajiv Shakhder and R. Suresh Kumar observed that adequate opportunity was not given to the Assessee to rebut the concerns and/or underlying materials on the basis of which the additions are made.

“As noted by the Tribunal and also by us, the relevant material required for claiming deduction under Section 80IB had been placed on record by the Assessee before the Assessing Officer. The only reason that the DIT and the Tribunal came to the conclusion that the assessment order was erroneous and prejudicial to the interest of the Revenue, was, that, according to them, the Assessing Officer had not applied his mind to the materials placed on record by the Assessee. In so far as the Assessee was concerned, it claimed that it had worked out the deduction in accordance with the provisions of Section 80IB(13) of the 1961 Act, which, in turn, referred to sub-section (7) to (12) of Section 80IA of the very same Act,” the bench said.