Income-tax Act, 2025

Business of prospecting for mineral oils - Section 54

Business of prospecting for mineral oils.

54. (1) Where the assessee undertakes specified oil exploration business, then deduction specified in sub-sections (3) and (4) shall be allowed while computing the income under the head "Profits and gains of business or profession".

(2) For the purposes of this section, "specified oil exploration business" means business consisting of prospecting for or extraction or production of mineral oils where the following conditions are fulfilled:

(a) the Central Government has entered into an agreement with the assessee;

(b) such agreement is entered for association or participation of the Central Government or any person authorised by it; and

(c) such agreement is laid before each House of Parliament.

(3) The deduction referred to in sub-section (1) shall be

(a) for the period before the beginning of commercial production, expenditure towards infructuous or abortive exploration incurred in respect of any surrendered area;

(b) for the period after the commencement of commercial production, expenditure (whether before or after such production) in respect of drilling or exploration activities or services or in respect of physical assets used in that connection;

(c) for the tax year of commencement of commercial production and such succeeding tax years as specified in the agreement, towards depletion of mineral oil in the mining area.

(4) The deductions referred to in sub-section (1) shall be

(a) either in lieu of, or in addition to, any allowance admissible under this Act as specified in the agreement; and

(b) computed and made in the manner specified in the agreement and the other provisions of this Act shall be deemed to have been modified to such extent.

(5) Where the business or any interest therein as referred to in sub-section (1) is wholly or partly transferred as per the provisions of the agreement, the profit s .... To read the full section download the app from Google Play store