My client is an oil and gas producer under a production sharing contract. It missed the year end and deposited into the Site Restoration Account in April. Does the six-month grace that tea companies get apply here too, and what is the ceiling?
No. Section 33ABA gives no grace at all: the deposit must be made "before the end of the previous year", not within six months of it, and that single word is the commonest way the deduction is lost. The section applies to an assessee carrying on the business of prospecting for, or extraction or production of, petroleum or natural gas or both in India in relation to which the Central Government has entered into an agreement with that assessee. The deposit is either with the State Bank of India in a special account under a scheme approved by the Government of India in the Ministry of Petroleum and Natural Gas, or in a Site Restoration Account under a deposit scheme framed by that Ministry. The deduction is the LOWER of the amount deposited and twenty per cent of the profits of that business computed under "Profits and gains of business or profession" before any deduction under section 33ABA — twenty, not the forty per cent that section 33AB allows — and it is given before brought-forward losses are set off under section 72. The section was inserted by the Finance (No. 2) Act, 1998 with effect from 1 April 1999, so it governs AY 1999-2000 onwards. One later amendment matters: Act No. 12 of 2020, with effect from 1 April 2020, substituted the audit limb of sub-section (2), so that from AY 2020-21 the accounts must be audited, and the report furnished, before the specified date referred to in section 44AB — one month before the section 139(1) due date — rather than along with the return.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2020-04-01, reported as Section 33ABA of the Income-tax Act, 1961. It bears on section 33ABA, section 33ABA(1), section 33ABA(2), section 33ABA(3), section 33ABA(4), section 33ABA(5), section 33ABA(7), section 33ABA(8), section 42, section 288(2), section 72, section Rule 5AD of the Income Tax Act 1961, in Deductions & Disallowances, How Tax Law Is Read and Assessment & Scrutiny matters.
Section 33ABA looks like section 33AB and is not. Four differences decide cases. First, the deadline: before the end of the previous year, with no six-month extension and no reference to the due date for the return. Second, the ceiling: twenty per cent, against forty per cent under section 33AB. Third, the withdrawal regime: section 33ABA(3) permits withdrawal only for the purposes specified in the scheme or the deposit scheme and contains none of the five escape circumstances — closure, death, HUF partition, dissolution, liquidation — that section 33AB(3) lists. Fourth, and most important, sub-section (4) works the other way round from its section 33AB counterpart: where an amount is used to buy plant for office or residential premises, office appliances other than computers, plant already fully written off, or new plant for an Eleventh Schedule industrial undertaking, section 33ABA(4) says that NO DEDUCTION under sub-section (1) shall be allowed in respect of that amount, rather than deeming the amount to be profits of the year of utilisation. On the other side, the closure charge in sub-section (5) is unusually generous in its measure: the amount withdrawn on closure of the account is reduced by the amount payable to the Central Government by way of profit or production share as provided in the section 42 agreement before it is charged, and the Explanation deems the business to be in existence even in a year in which it is not. Two further features are easy to miss: the third proviso to sub-section (1) deems interest credited to the account to be a deposit, so accrued interest itself generates deduction, and the closing Explanation puts accrued interest inside "the amount standing to the credit of the assessee". The eight-year lock-in in sub-section (8) and its two provisos are in the same terms as section 33AB(8).
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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The operative words are these: "33ABA. (1) Where an assessee is carrying on business consisting of the prospecting for, or extraction or production of, petroleum or natural gas or both in India and in relation to which the Central Government has entered into an agreement with such assessee for such business, has before the end of the previous year— (a) deposited with the State Bank of India any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the assessee with that Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Government of India in the Ministry of Petroleum and Natural Gas; or (b) deposited any amount in an account (hereafter in this section referred to as the Site Restoration Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Ministry referred to in clause (a) (hereafter in this section referred to as the deposit scheme), the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of— (i) a sum equal to the amount or the aggregate of the amounts so deposited; or (ii) a sum equal to twenty per cent of the profits of such business (computed under the head 'Profits and gains of business or profession' before making any deduction under this section), whichever is less". Three provisos follow: no repetition of the deduction in a partner's or member's computation; no second deduction of the same deposit in another year; and "any amount credited in the special account or the Site Restoration Account by way of interest shall be deemed to be a deposit". Sub-section (5) charges the amount withdrawn on closure of the account "as reduced by the amount, if any, payable to the Central Government by way of profit or production share as provided in the agreement referred to in section 42", with an Explanation deeming the business to be in existence. The closing Explanation defines "State Bank of India" by reference to the State Bank of India Act, 1955 and provides that "the amount standing to the credit of the assessee in the special account or the Site Restoration Account" includes interest accrued to those accounts.
Not a judgment. The statutory position is that the section 33ABA deposit must be made before the end of the previous year; that the deduction is the lower of the deposit and twenty per cent of the profits of the eligible business computed under the business head before the section 33ABA deduction; that it is given before brought-forward losses are set off under section 72; that it is inadmissible unless the accounts of that business are audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB, a requirement substituted by Act No. 12 of 2020 with effect from 1 April 2020 for the earlier requirement to furnish the report along with the return; that interest credited to the account counts as a deposit; that withdrawal is permitted only for scheme purposes; that amounts used on the four barred categories of purchase simply do not attract the deduction under sub-section (4); that a closure withdrawal is charged net of the Government's profit or production share under the section 42 agreement; that an amount released and not utilised within the previous year is charged in that year; and that an asset acquired under the scheme and transferred within eight years from the end of the previous year of acquisition brings back the part of its cost relatable to the deduction.
Not a judgment; no judicial reasoning is stated for the section itself.
Where an assessee is carrying on business consisting of the prospecting for, or extraction or production of, petroleum or natural gas or both in India and in relation to which the Central Government has entered into an agreement with such assessee for such business, has before the end of the previous year—
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Handle my notice → Ask a CA on WhatsAppNo. Section 33ABA gives no grace at all: the deposit must be made "before the end of the previous year", not within six months of it, and that single word is the commonest way the deduction is lost. The section applies to an assessee carrying on the business of prospecting for, or extraction or production of, petroleum or natural gas or both in India in relation to which the Central Government has entered into an agreement with that assessee. The deposit is either with the State Bank of India in a special account under a scheme approved by the Government of India in the Ministry of Petroleum and Natural Gas, or in a Site Restoration Account under a deposit scheme framed by that Ministry. The deduction is the LOWER of the amount deposited and twenty per cent of the profits of that business computed under "Profits and gains of business or profession" before any deduction under section 33ABA — twenty, not the forty per cent that section 33AB allows — and it is given before brought-forward losses are set off under section 72. The section was inserted by the Finance (No. 2) Act, 1998 with effect from 1 April 1999, so it governs AY 1999-2000 onwards. One later amendment matters: Act No. 12 of 2020, with effect from 1 April 2020, substituted the audit limb of sub-section (2), so that from AY 2020-21 the accounts must be audited, and the report furnished, before the specified date referred to in section 44AB — one month before the section 139(1) due date — rather than along with the return. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 33ABA, section 33ABA(1), section 33ABA(2), section 33ABA(3), section 33ABA(4), section 33ABA(5), section 33ABA(7), section 33ABA(8), section 42, section 288(2), section 72, section Rule 5AD of the Income Tax Act 1961. It is reported as Section 33ABA of the Income-tax Act, 1961. Section 33ABA looks like section 33AB and is not. Four differences decide cases. First, the deadline: before the end of the previous year, with no six-month extension and no reference to the due date for the return. Second, the ceiling: twenty per cent, against forty per cent under section 33AB. Third, the withdrawal regime: section 33ABA(3) permits withdrawal only for the purposes specified in the scheme or the deposit scheme and contains none of the five escape circumstances — closure, death, HUF partition, dissolution, liquidation — that section 33AB(3) lists. Fourth, and most important, sub-section (4) works the other way round from its section 33AB counterpart: where an amount is used to buy plant for office or residential premises, office appliances other than computers, plant already fully written off, or new plant for an Eleventh Schedule industrial undertaking, section 33ABA(4) says that NO DEDUCTION under sub-section (1) shall be allowed in respect of that amount, rather than deeming the amount to be profits of the year of utilisation. On the other side, the closure charge in sub-section (5) is unusually generous in its measure: the amount withdrawn on closure of the account is reduced by the amount payable to the Central Government by way of profit or production share as provided in the section 42 agreement before it is charged, and the Explanation deems the business to be in existence even in a year in which it is not. Two further features are easy to miss: the third proviso to sub-section (1) deems interest credited to the account to be a deposit, so accrued interest itself generates deduction, and the closing Explanation puts accrued interest inside "the amount standing to the credit of the assessee". The eight-year lock-in in sub-section (8) and its two provisos are in the same terms as section 33AB(8). If it applies to you, the first step is this: Diarise the deposit for a date before 31 March, not for September. There is no six-month limb in section 33ABA and no reference to the return due date.
The operative words are these: "33ABA. (1) Where an assessee is carrying on business consisting of the prospecting for, or extraction or production of, petroleum or natural gas or both in India and in relation to which the Central Government has entered into an agreement with such assessee for such business, has before the end of the previous year— (a) deposited with the State Bank of India any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the assessee with that Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Government of India in the Ministry of Petroleum and Natural Gas; or (b) deposited any amount in an account (hereafter in this section referred to as the Site Restoration Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Ministry referred to in clause (a) (hereafter in this section referred to as the deposit scheme), the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of— (i) a sum equal to the amount or the aggregate of the amounts so deposited; or (ii) a sum equal to twenty per cent of the profits of such business (computed under the head 'Profits and gains of business or profession' before making any deduction under this section), whichever is less". Three provisos follow: no repetition of the deduction in a partner's or member's computation; no second deduction of the same deposit in another year; and "any amount credited in the special account or the Site Restoration Account by way of interest shall be deemed to be a deposit". Sub-section (5) charges the amount withdrawn on closure of the account "as reduced by the amount, if any, payable to the Central Government by way of profit or production share as provided in the agreement referred to in section 42", with an Explanation deeming the business to be in existence. The closing Explanation defines "State Bank of India" by reference to the State Bank of India Act, 1955 and provides that "the amount standing to the credit of the assessee in the special account or the Site Restoration Account" includes interest accrued to those accounts. The matter was decided on 2020-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not a judgment. The statutory position is that the section 33ABA deposit must be made before the end of the previous year; that the deduction is the lower of the deposit and twenty per cent of the profits of the eligible business computed under the business head before the section 33ABA deduction; that it is given before brought-forward losses are set off under section 72; that it is inadmissible unless the accounts of that business are audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB, a requirement substituted by Act No. 12 of 2020 with effect from 1 April 2020 for the earlier requirement to furnish the report along with the return; that interest credited to the account counts as a deposit; that withdrawal is permitted only for scheme purposes; that amounts used on the four barred categories of purchase simply do not attract the deduction under sub-section (4); that a closure withdrawal is charged net of the Government's profit or production share under the section 42 agreement; that an amount released and not utilised within the previous year is charged in that year; and that an asset acquired under the scheme and transferred within eight years from the end of the previous year of acquisition brings back the part of its cost relatable to the deduction.
Not a judgment; no judicial reasoning is stated for the section itself. In the words reproduced by the source cited on this page: "Where an assessee is carrying on business consisting of the prospecting for, or extraction or production of, petroleum or natural gas or both in India and in relation to which the Central Government has entered into an agreement with such assessee for such business, has before the end of the previous year—"
It was decided by the CBDT Circulars & Instructions on 2020-04-01 and is reported as Section 33ABA of the Income-tax Act, 1961. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 33ABA, section 33ABA(1), section 33ABA(2), section 33ABA(3), section 33ABA(4), section 33ABA(5), section 33ABA(7), section 33ABA(8), section 42, section 288(2), section 72, section Rule 5AD, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not a judgment. The statutory position is that the section 33ABA deposit must be made before the end of the previous year; that the deduction is the lower of the deposit and twenty per cent of the profits of the eligible business computed under the business head before the section 33ABA deduction; that it is given before brought-forward losses are set off under section 72; that it is inadmissible unless the accounts of that business are audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB, a requirement substituted by Act No. 12 of 2020 with effect from 1 April 2020 for the earlier requirement to furnish the report along with the return; that interest credited to the account counts as a deposit; that withdrawal is permitted only for scheme purposes; that amounts used on the four barred categories of purchase simply do not attract the deduction under sub-section (4); that a closure withdrawal is charged net of the Government's profit or production share under the section 42 agreement; that an amount released and not utilised within the previous year is charged in that year; and that an asset acquired under the scheme and transferred within eight years from the end of the previous year of acquisition brings back the part of its cost relatable to the deduction. It arises in Deductions & Disallowances, How Tax Law Is Read and Assessment & Scrutiny matters, on section 33ABA, section 33ABA(1), section 33ABA(2), section 33ABA(3), section 33ABA(4), section 33ABA(5), section 33ABA(7), section 33ABA(8), section 42, section 288(2), section 72, section Rule 5AD of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Compute the ceiling at twenty per cent of the profits of the eligible business under the business head before the section 33ABA deduction, and do not carry the forty per cent figure across from section 33AB. Get the sub-section (2) audit done and the report filed before the specified date referred to in section 44AB — one month before the section 139(1) due date — and not with the return. The words "before the specified date referred to in section 44AB and the assessee furnishes by that date" were substituted for "and the assessee furnishes, along with his return of income," by Act No. 12 of 2020 with effect from 1 April 2020, so they govern AY 2020-21 onwards; for AY 2019-20 and earlier the report went in along with the return. The deduction "shall not be admissible unless" that condition is met. The departmental footnotes identify rule 5AD and Form No. 3AD and record that rule 12 requires the report to be filed separately rather than attached to the return. Bring interest credited to the account into the deduction computation. The third proviso to sub-section (1) deems it a deposit, and the closing Explanation puts accrued interest inside the balance for the purposes of the section. Before any withdrawal, check it against the scheme. Section 33ABA(3) has no list of permitted circumstances at all — the only lawful withdrawal is one for a purpose specified in the scheme or the deposit scheme. On closure of the account, compute the charge under sub-section (5) net of the amount payable to the Central Government by way of profit or production share under the section 42 agreement, and be ready with the agreement to prove that figure. Keep the eight-year clock on every asset bought out of the account: sub-section (8) charges the part of the cost relatable to the deduction if the asset is transferred before eight years from the end of the previous year of acquisition.
Still good law. The text is verified on published editions carrying six different vintages — 2002, 2009, 2013, 2019, 2021 and 2024. All print the same twenty per cent figure, the same before- the-end-of-the-previous-year deadline, the same sub-section (3) without any list of circumstances, and the same sub-section (4) in its bar form. The only substantive change since the Finance Act 1999 omission of the proviso to sub-section (7) is the substitution in sub-section (2) by Act No. 12 of 2020 with effect from 1 April 2020, which this entry states; so the audit and report deadline given here governs assessment year 2020-21 onwards, and the earlier requirement to furnish the report 'along with his return of income' governs 2019-20 and earlier. That distinction decides cases on its own, because a report furnished with the return but after the specified date referred to in section 44AB is late for a year from 2020-21 and in time for an earlier one. No judicial treatment of this section has been checked and no decided case on it has been found, so nothing here is a survey of the authority. Three questions the text does not settle. Whether a deposit made on the last day of the previous year but credited by the bank afterwards is 'deposited before the end of the previous year' is untested. Whether the twenty per cent ceiling is computed on the profits of the eligible business alone where the assessee has other business income is a computation question the section states but does not illustrate. And how the closure charge in sub- section (5) is worked where the Government's profit or production share under the section 42 agreement is itself in dispute is not addressed anywhere in the section. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Section 33ABA was transcribed in full — sub-sections (1) to (9) with all three provisos to sub-section (1), the Explanation to sub-section (5), the Explanation to sub-section (8) and the closing Explanation — from the published edition as amended up to 2009, which prints the Income-tax Act, 1961 and the heading 'Site Restoration Fund'. The same text was transcribed again from the edition as amended up to 2002, and sub-section (1) again from the edition as amended up to 2013; all three agree, including on the twenty per cent figure. Commencement is from the footnote printed on all three: 'Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.' A PROVISO THAT NEVER OPERATED. A footnote on the 2002 and 2013 editions records that a proviso to sub-section (7) — which had excluded amounts released at the closure of the account in the circumstances in clauses (b), (c) and (e) of sub-section (3) — was OMITTED by the Finance Act, 1999 with effect from 1 April 1999, having been inserted by the Finance (No. 2) Act, 1998 from the same date. It therefore never operated, and its language is a leftover from the section 33AB model, since section 33ABA(3) contains no clauses (b), (c) or (e) at all. THE ONE REAL CHANGE. Sub-sections (1) and (3) to (9) and all the Explanations are word for word the same on the edition as amended up to 2024 as on the older ones. Sub-section (2) is not: the words 'and the assessee furnishes, along with his return of income,' were substituted by 'before the specified date referred to in section 44AB and the assessee furnishes by that date' by Act No. 12 of 2020 with effect from 1 April 2020. That is footnoted on the edition as amended up to 2021, and the change is bracketed by the 2019 edition, which still prints the old words. The identical substitution is footnoted for section 33AB(2) in the same terms, which is a second and independent record of the same amending Act and date. WHAT WAS NOT READ. Rule 5AD and Form No. 3AD are taken from the section's own footnote; rule 5AD itself has not been opened and the form number is therefore not independently dated. The Site Restoration Fund Scheme, 1999, referred to in another footnote, has not been read. And the reference to 'section 617 of the Companies Act, 1956' in the proviso to sub-section (8) is the text as printed; how it maps to the Companies Act, 2013 is not addressed here. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not a judgment. The statutory position is that the section 33ABA deposit must be made before the end of the previous year; that the deduction is the lower of the deposit and twenty per cent of the profits of the eligible business computed under the business head before the section 33ABA deduction; that it is given before brought-forward losses are set off under section 72; that it is inadmissible unless the accounts of that business are audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB, a requirement substituted by Act No. 12 of 2020 with effect from 1 April 2020 for the earlier requirement to furnish the report along with the return; that interest credited to the account counts as a deposit; that withdrawal is permitted only for scheme purposes; that amounts used on the four barred categories of purchase simply do not attract the deduction under sub-section (4); that a closure withdrawal is charged net of the Government's profit or production share under the section 42 agreement; that an amount released and not utilised within the previous year is charged in that year; and that an asset acquired under the scheme and transferred within eight years from the end of the previous year of acquisition brings back the part of its cost relatable to the deduction.
TaxSphere, “Statutory position — s.33ABA: the Site Restoration Fund for petroleum and natural gas — the deposit must be in before the year ends, the ceiling is twenty per cent, and the closure clawback is net of the Government's production share”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-33aba-site-restoration-fund-deposit-before-the-year-end-twenty-per-cent-and-the-closure-clawback/ (validity last checked 2026-09-09)
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