Income Tax – Revenue appeal against Enron dismissed by Supreme Court
THE assessee involved in this case is Enron Oil & Gas India Ltd (EOGIL). It is incorporated in the Cayman Islands, and its business is oil exploration. The bone of contention is exchange losses which were disallowed by the Revenue. Under normal circumstances had it been attributable to import of any capital assets, it would have been added to the cost of the assets on which the assessee would have claimed depreciation u/s 32. But here is a very special scenario which has been described by the Apex Court as a 'special regime' and the same does not come under the Accounting Standard 11. Although the exchange losses have been allowed to the assessee but why and how can be understood only from the matrix of facts of this very special case for the mineral exploration industry. This ruling becomes landmark also from the viewpoint of authoritative and lucid interpretation of the concept of Production Sharing Contract (PSC) which is a special fiscal regime, followed by most countries worldwide.