Section 49 — Site Restoration Fund. Successor to s.33ABA of the 1961 Act.
Section 49 is in Chapter IV — Computation of Total Income, which runs from section 13 to section 95.
Sub-section (1) allows a deduction to an assessee carrying on the business of prospecting for, extracting or producing petroleum or natural gas (or both) in India under an agreement with the Central Government, the deduction being computed on the basis of a deposit into a special account or a site restoration account, on the terms set out in Schedule X. Sub-section (2) brings any amount withdrawn or transferred out of those accounts — whether at closure of the account or otherwise — to tax in the year of withdrawal or transfer, again as Schedule X provides. Sub-section (3) charges to tax the sale or other transfer of any asset acquired under the special scheme or the deposit scheme referred to in Schedule X.
It gives an oil and gas operator a deduction for money set aside now against the future cost of restoring the site, and then claws the relief back if the money leaves the account or the asset bought with it is sold, so the deduction only survives while the fund is actually held for the purpose.
The section itself fixes no deposit limit, no percentage and no timing — every one of those, plus the mechanics of the special account and the site restoration account, sits in Schedule X, and the section does no more than route you there three times. Practically, deposit and deduction go together, and any withdrawal or transfer out of the account, or a sale of an asset bought with the money, is a taxable event in the year it happens rather than a reversal of the earlier year's deduction.
A company prospecting for and producing natural gas in India under an agreement with the Central Government deposits Rs. 40 crore during the year into a site restoration account and claims a deduction under sub-section (1). The section itself fixes no percentage and no ceiling — how much of that Rs. 40 crore is deductible is computed entirely as Schedule X provides. Two years later it withdraws Rs. 12 crore to meet an unrelated expense; the account is not being closed, but sub-section (2) still charges the Rs. 12 crore in the year of withdrawal, because it catches amounts withdrawn or transferred “at the time of closure or otherwise”. If it later sells a compressor acquired under the deposit scheme, sub-section (3) brings that sale to tax separately, again as Schedule X directs.
In the return and assessment of a petroleum or natural gas operator, where the deduction is claimed against the deposit and the records of the special account or site restoration account are the evidence. The condition that bites first is the agreement with the Central Government for that business — without it the section has nothing to operate on, and every figure in the claim comes from Schedule X, not from here.
Any amount withdrawn or transferred from the aforesaid accounts at the time of closure or otherwise shall be charged to tax in the year in which the amount is transferred or withdrawn as per the provisions of the Schedule X.
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.