{"id":116,"date":"2008-09-04T12:54:14","date_gmt":"2008-09-04T12:54:14","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=116"},"modified":"2008-09-04T12:54:14","modified_gmt":"2008-09-04T12:54:14","slug":"cit-vs-enron-oil-gas-supreme-court","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/cit-vs-enron-oil-gas-supreme-court\/","title":{"rendered":"CIT vs. Enron Oil &#038; Gas (Supreme Court)"},"content":{"rendered":"<p><a href=\"http:\/\/www.itatonline.org\/dlmonitor\/download.php?t=f&#038;i=70\"><img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/www.itatonline.org\/images\/download.gif?w=605\" class=\"alignright\" border=\"0\" \/><\/a><\/p>\n<p>Where the assessee had entered into a production sharing contract with a consortium which was governed by section 42 of the Act and the assessee made contribution at a certain rate to the consortium whereas the expenditure incurred out of the said contribution stood converted on the basis of a different exchaneg rate  which exercise resulted into a loss on conversion of foreign currency to the assessee and the AO held the loss to be a notional loss, Held,<\/p>\n<p>(a)\tS. 42 represented an independent regime of taxation which had to be governed in accordance with the PSC. The PSC specified the deductions allowable and also a special manner of accounting which was at variance with the normal accounting standards. The said &#8220;PSC accounting&#8221; obliterated the difference between capital and revenue expenditure.<\/p>\n<p>(b)\tThe PSC contemplated currency translation because capital contributions by the co-venturers had to be converted under the PSC at one rate whereas the expenditure had to be converted at a different rate. This exercise resulted into loss\/profit on conversion. <\/p>\n<p>(c)\tGiven the nature of a PSC, the profits cannot be ascertained without taking into account translation losses. Accordingly it cannot be said that &#8220;translation losses&#8221; under the PSC are illusory losses. <\/p>\n<p>See Also: <strong><a href=\"http:\/\/www.itatonline.org\/pdf\/woodward_governer_foreign_exchange_fluctuation_s_43A.pdf\" target=\"_blank\">Woodward Governer<\/a><\/strong> 294 ITR 451 (Del).<\/p>\n<p><!--\n\n\n\n\n\n\/\/--><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Where the assessee had entered into a production sharing contract with a consortium which was governed by section 42 of the Act and the assessee made contribution at a certain rate to the consortium whereas the expenditure incurred out of the said contribution stood converted on the basis of a different exchaneg rate  which exercise resulted into a loss on conversion of foreign currency to the assessee and the AO held the loss to be a notional loss, Held,<\/p>\n<div class=\"read-more\"><a href=\"https:\/\/itatonline.org\/archives\/cit-vs-enron-oil-gas-supreme-court\/\">Read more &#8250;<\/a><\/div>\n<p><!-- end of .read-more --><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[4,7],"tags":[],"class_list":["post-116","post","type-post","status-publish","format-standard","hentry","category-all-judgements","category-supreme-court"],"acf":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/116","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/comments?post=116"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/116\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=116"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/categories?post=116"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/tags?post=116"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}