IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN Before Sh. Satbeer Singh Godara, Judicial Member &

Sh. M. Balaganesh, Accountant Member ITA No. 2134/Del./2016 : Asstt. Year : 2006-07 DCIT, Vs BG Exploration & Production (India)

International Taxation, Ltd., C/o Nangia & Co., Circle-1, 3^rd Floor, NCR Plaza, New Cantt.

Dehradun Road, Dehradun (APPELLANT) (RESPONDENT)

PAN No. AAACE4569K Assessee by: Sh. Amit Arora, Adv. &

Sh. Vishal Mishra, Adv.

Revenue by: Sh. Mithun Shete, Sr. DR Date of Hearing: 18.03.2025 Date of Pronouncement: 28.04.2025

ORDER

Per Satbeer Singh Godara, Judicial Member:

This Revenue’s appeal for Assessment Year 2006-07, arises against the CIT(A)-2, Noida’s in case No. 01/CIT(A)- 2/2007-08 dated 11.02.2016, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”).

2. Heard both the parties at length. Case file perused.

3. This Revenue’s appeal raises the following substantive grounds:

“(i) Whether on the facts of the case and in law, the CIT(A) has erred in allowing the entire expenses of the assessee deductible u/s 42(1)(b) of the Act ignoring the clear observations of the Hon'ble High Court that…………….". If the assessee seeks exemption of any expenditure u/s 42(1) of the Act, he has to show that he has entered into an agreement with the Central govt. of the nature mentioned in section 42(1) of the Act and that, under the agreement, he has been authorized to incur certain expenditure and those expenditures fall within wither clause (a) or clause (b) or clause (c) of section 42(1) of the Act."

(ii) Whether on the facts of the case and in law, the CIT(A) has erred in not appreciating the fact that only the expenses as approved by the "Joint Operating Board" of concerned PSC could be eligible for deduction u/s

42(1) (b) of the Act.

(iii) Whether on the facts of the case and in law, the CIT(A) has erred in not ascertaining the expenses not approved by the Joint Operating Board and hence not a part of PSC related expenses, and in not holding those expenses to be covered by the provisions of section 44C as "Head Office Expenses", especially when the Hon'ble ITAT had already held that such expenses are of the nature of "Head Office Expenses" within the meaning of section 44C of the Act.

(iv) Whether on the facts of the case and in law, the CIT(A) has erred in holding that the expenditure of the assessee was allowable u/s 42(1)(b) of the Act, and in ignoring the fact that the Hon'ble ITAT, While adjudicating the same issue in the case of assessee's holding company, namely, BGIL, has already observed that expenses claimed to have been incurred by BGIL for the services rendered to the assessee were not fully supported by evidences and hence BGIL had failed to substantiate its claim regarding allocation of expenses incurred by it for the services rendered to BGEPIL (the assessee).”

4. Suffice to say, this is the second round of proceedings between the parties in furtherance of hon’ble jurisdictional high court’s remand directions extracted in para 3.3 page 2 of the CIT(A)’s order to verify the alleged agreement between the assessee and the Central Government, so as to claim deduction u/s 42(1) of the Act.

5. It is in this factual backdrop that both the parties reiterate their respective stands against and in support of the CIT(A)’s action reversing the impugned assessment findings, as under:

“4.1 It is noted that CIT (A)-I, Dehradun bad earlier held that the expenditure was allowable under section 42(1) of the Act. Hon'ble ITAT, based on facts and also relying upon the judgement of the Apex Court in the case of Enron Oil and Gas Ltd. (2008) 305 ITR 77, has held that the expenditure was covered u/s 42(1) of the Act. Hon'ble jurisdictional High Court in ITA No. 25 of 2009 have remitted the matter back to this office with a direction to ascertain, whether the expenditure, being the subject matter of dispute, falls under Clause (a) or Clause (b) or Clause (c) of section 42(1) of the Act, if so, to proceed in a