Section 42Central Act
Section 42: Special provision for deductions in the case of business for prospecting, etc., for mineral oil
Special provision for deductions in the case of business for prospecting, etc., for mineral oil.
(1)
For the purpose of computing the profits or gains of any business consisting of the prospecting for or extraction or production of mineral oils in relation to which the Central Government has entered into an agreement with any person for [the association or participation of the Central Government or any person authorised by it in such business] [ Substituted by Act 16 of 1981, Section 8, for certain words (w.e.f. 1.4.1981).] (which agreement has been laid on the Table of each House of Parliament), there shall be made in lieu of, or in addition to, the allowances admissible under this Act, such allowances as are specified in the agreement in relation-(a)
to expenditure by way of infructuous or abortive exploration expenses in respect of any area surrendered prior to the beginning of commercial production by the assessee;(b)
after the beginning of commercial production, to expenditure incurred by the assessee, whether before or after such commercial production, in respect of drilling or exploration activities or service or in respect of physical assets used in that connection, except assets on which allowance for depreciation is admissible under section 32 [*] [ The word " and" omitted by Act 16 of 1981, Section 8 (w.e.f. 1.4.1981).]:(c)
to the depletion of mineral oil in the mining area in respect of the assessment year relevant to the pervious year in which commercial production is begun and for such succeeding year or years as may be specified in the agreement;(2)
[ Where the business of the assessee consisting of the prospecting for or extraction or production of petroleum and natural gas is transferred wholly or partly or any interest in such business is transferred in accordance with the agreement referred to in sub-section (1), subject to the provisions of the said agreement and where the proceeds of the transfer (so far as they consist of capital sums)-(a)
are less than the expenditure incurred remaining unallowed, a deduction equal to such expenditure remaining unallowed, as reduced by the proceeds of transfer, shall be allowed in respect of the previous year in which such business or interest, as the case may be, is transferred;(b)
exceed the amount of the expenditure incurred remaining unallowed, so much of the excess as does not exceed the difference between the expenditure incurred in connection with the business or to obtain interest therein and the amount of such expenditure remaining unallowed, shall be chargeable to income-tax as profits and gains of the business in the previous year in which the business or interest therein, whether wholly or partly, had been transferred:(c)
are not less than the amount of the expenditure incurred remaining unallowed, no deduction for such expenditure shall be allowed in respect of the previous year in which the business or interest in such business is transferred or in respect of any subsequent year or years:(i)
shall not apply in the case of the amalgamating or the demerged company; and(ii)
shall, as far as may be, apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the latter had not transferred the business or interest in the business.]Previous
Sec 41 — Profits chargeable to tax
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Sec 43 — Definitions of certain terms relevant to income from profits and gains of business or profession
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