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
CBDT Circulars & InstructionsCuts both ways
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.
