Schedule X — DEDUCTION FOR SITE RESTORATION FUND FOR COMPUTING INCOME UNDER THE HEAD “PROFITS AND GAINS OF BUSINESS OR PROFESSION”

[See section 49]
DEDUCTION FOR SITE RESTORATION FUND
FOR COMPUTING INCOME UNDER THE HEAD
“PROFITS AND GAINS OF BUSINESS OR PROFESSION”
Quantum of deduction.
1. (1) An assessee shall be allowed deduction of,––
( a) the amount or aggregate of the amount deposited by the assessee in the
account as specified in paragraph 2; or
( b) 20% of the profits of such business computed under the head “Profits
and gains of business or profession” before making any deduction under
this paragraph,
whichever is less.
(2) The deduction shall be allowed before allowing set off of loss, if any, brought
forward from earlier tax years as per section 112.
(3) Any interest credited in the specified account shall be deemed to be a deposit.
Conditions for claiming deduction.
2. (1) Deduction under paragraph 1 shall be allowed if the assessee––
( a) is, during the tax year, carrying on the business consisting of the pros -
pecting for, or extraction or production of, petroleum or natural gas,
or both in India, and has entered into an agreement with the Central
Government for such business;
( b) has, before the end of the tax year, deposited any amount in the specified
account, being,––
( i) a special account maintained with the State Bank of India in ac -
cordance with, and for the purposes specified in the special scheme;
or
( ii) a site restoration account in accordance with, and for the purposes
specified in the deposit scheme; and
( c) gets the accounts of such business for the relevant tax year audited by
an accountant before the specified date referred to in section 63 and fur-
nishes the audit report, in such form and manner, as may be prescribed
and verified by such accountant, by that date.
(2) Where the assessee is required, by or under any other law, to get his accounts
audited, then it shall be sufficient compliance of sub-paragraph (1)( c), if such
assessee—
( a) gets the accounts of such business audited under such law before the
specified date referred to in section 63; and
( b) furnishes by that date the report of such audit and a report by an
accountant in such form referred to in sub-paragraph (1)(c).
(3) If any deduction has been allowed under paragraph 1 in any tax year, no
deduction shall be allowed in respect of such amount in any other tax year.
(4) Where the assessee referred to in paragraph 1 is a firm or an association of
persons or body of individuals, deduction under paragraph 1 shall not be allowed
in computing the income of any of the partners or members of such assessee.
Withdrawal from specified account.
3. (1) Any amount standing to the credit of the assessee in the specified account
shall not be allowed to be withdrawn except for the purposes specified in the special
scheme or in the deposit scheme.
(2)(a) Irrespective of anything contained in sub-paragraph (1), if the amount is
utilised for the purchase of specified articles or things, then, such amount shall not
be allowed as deduction under paragraph 1;
(b) for the purposes of this paragraph, “specified article or thing” means—
( i) any machinery or plant to be installed in any office premises or residen-
tial accommodation, including any accommodation in the nature of a
guest-house;
( ii) any office appliances (except computers);
( iii) any machinery or plant, the whole of the actual cost of which is allowed as
a deduction (whether by way of depreciation or otherwise) in computing
the income chargeable under the head “Profits and gains of business or
profession” of any one tax year;
( iv) any new machinery or plant to be installed in an industrial undertaking
for the purposes of business of construction, manufacture or production
of any article or thing specified in the list in Schedule XIII.
(3) Where any amount standing to the credit of the assessee in specified account is
withdrawn on closure of such account in any tax year, then the amount computed
as under shall be deemed to be the profits and gains of business or profession for
the tax year and accordingly the following amount shall be charged to income-tax
for that tax year:
A = B – C
where,—
A = deemed profits and gains of business or profession of that tax year;
B = amount withdrawn from the specified account on its closure; and
C = amount, if any, payable to the Central Government by way of profit
or production share as provided in agreement referred to in section
54.
(4) Where any amount is withdrawn on closure of specified account in a tax year
in which the business of the assessee is no longer in existence, sub-paragraph (3)
shall apply as if the business is in existence in that tax year.
(5) If any amount standing to the credited of the assessee—
( a) in the specified account is released by the State Bank of India; or
( b) is withdrawn by the assessee from the site restoration account,
during any tax year for utilisation for the purposes of such business as per the special
scheme or deposit scheme and the same is not so utilised, either wholly or in part
within that tax year, such amount shall be deemed to be the profits and gains of
business of that tax year and accordingly be charged to income-tax for that tax year.
(6) Where any amount standing to the credit of the assessee in the special account
or in the Site Restoration Account is utilised by the assessee for the purposes of any
expenditure in connection with such business in accordance with the scheme or the
deposit scheme, such expenditure shall not be allowed in computing the income
chargeable under the head “Profits and gains of business or profession”.
No deduction of expenditure met through amount withdrawn from specified
account.
4. (1) If the amount standing to the credit of the assessee in the specified account
is utilised to incur any expenditure for the purpose of business as per the special
scheme or deposit scheme, no deduction against such expenditure shall be allowed
in computing the income chargeable under the head “Profits and gains of business
or profession”.
(2) In this paragraph, “amount standing to the credit of the assessee in the specified
account” includes interest to such accounts.
Sale or transfer of asset acquired as per special scheme or deposit scheme.
5. (1) Where any asset,––
( a) is acquired as per the special scheme or the deposit scheme; and
( b) is sold or transferred to any person in the tax year at any time before the
expiry of eight years from the end of tax year in which it was acquired,
then, the part of cost of asset as is relatable to the deduction allowed under paragraph
1 shall be deemed to be the profits and gains of business of the tax year in which
such asset is sold or transferred and shall accordingly be charged to income-tax
for that tax year.
(2) Sub-paragraph (1) shall not apply, if the asset is sold or transferred by—
( a) the assessee to the specified person; or
( b) a firm to a company in connection with succession of business or profes-
sion of the firm by such company subject to the following conditions:—
( i) the provisions of special scheme or deposit scheme is applicable
to the company in the same manner as it applied to the firm;
( ii) all the properties of the firm relating to the business or profession
immediately before the succession becomes the properties of the
company;
( iii) all the liabilities of the firm relating to the business or profession
immediately before the succession becomes the liabilities of the
company; and
( iv) all the shareholders of the company were partners of the firm im-
mediately before the succession.
(3) In this paragraph, “specified person” means—
( a) Government; or
( b) a local authority; or
( c) a corporation established by or under a Central, State or Provincial Act;
or
( d) a Government company as defined in section 2( 45) of the Companies
Act, 2013 (18 of 2013).
Interpretation.
6. For the purposes of this Schedule,—
( a) “amount standing to the credit of the assessee” pertaining to the specified
account includes interest accrued to such accounts;
( b) “deposit scheme” means a scheme made in this behalf by the Ministry
of Petroleum and Natural Gas;
( c) “specified account” means a special account or site restoration account;
( d) “special account” means an account maintained with the State Bank
of India for making deposits in accordance with, and for the purposes
specified in the special scheme;
( e) “special scheme” means a scheme approved in this behalf by the Gov -
ernment of India in the Ministry of Petroleum and Natural Gas;
( f) “site restoration account” means an account opened by the assessee for
making deposits in accordance with, and for the purposes specified in
the deposit scheme;
( g) “State Bank of India” means the State Bank of India constituted under
the State Bank of India Act, 1955 (23 of 1955).