The Commissioner Of Income Tax-5 v. M/S.essar Oil Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (Lodg)NO.921 OF 2006 The Commissioner of Income Tax-5...Appellant vs. M/s.Essar Oil Limited....Respondent. --- Mr.Sureshkumar, for appellant.Mr.Soli Dastoor, Sr.Advocate with N.Shah &A.K.Jasani, for Respondent. CORAM: D.K.DESHMUKH & J.P.DEVADHAR, JJ. DATED: 16[th] October,2008. P.C.:- 1.The commissioner of income tax has raisedfollowing substantial questions of law:- (a)The substantial question of lawarises in the present appeal is regardingthe correct interpretation of Section andother sections of the Income-tax Act,1961and whether in the facts and in thecircumstances of the case and in law, theHon'ble Tribunal was right in treating theexpenses incurred by the assessee for theissuance of convertible debentures entirelyrevenue in nature? (b)The second substantial question oflaw arises in the present appeal isregarding the correct interpretation ofsection and other sections of the Income-taxAct,1961 and whether in the facts and in thecircumstances of the case and in law, theHon'ble Tribunal is justified in holdingthat the preliminary expenses incurred bythe assessee prior to the commencement ofits business activity as a revenueexpenditure ? 2.As regards the first question is concerned,the Counsel on both the sides agree that the similarquestion raised in Income Tax appeal no.541 of 2008“C.I.T. Vs. M/s.Siltap Chemicals Ltd, has beendismissed by this Court on 30.9.2008. 2.As regards the second question is concerned,the finding recorded by the Tribunal is that theassessee is engaged in the business of operation ofrigs for extraction of oil and undertaking other oilrelated activities. It is further recorded by theTribunal that in the interest of assessee's businessand in continuation of the business carried on by it,the assessee had to explore the chances ofdevelopment in the field of oil exploration for whichit had to submit itself for bidding and tenders. Thetribunal has held that submitting tenders and bids inthe field of oil exploration is a highlysophisticated technical task for which the assesseecompany had to incur substantial amount ofexpenditure before submitting its bid. If theassessee is not successful in obtaining bid, such expenditure is allowable as revenue expenditure. TheTribunal has held that merely because the assesseefailed to secure a bid, the expenditure cannot bedisallowed. The finding recorded by the tribunal isfinding of fact. No question of law arises. Appeal isdismissed. (D.K.DESHMUKH, J.) (J.P.DEVADHAR, J.)