1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.135 OF 2008 The Commissioner of Income Tax-5. ...Appellant vs. M/s.Essar Oil Ltd. ...Respondent. --- Mr.Suresh Kumar, for Appellant. Mr.Soli Dastoor, Sr.Advocate with Mr.N.Shah & Mr.A.K.Jasani, for Respondent. CORAM: D.K.DESHMUKH & J.P.DEVADHAR, JJ. DATED: 16th October,2008. P.C.:- 1. The Commissioner of Income Tax has raised three questions in this appeal, which read as under:- (1) Whether the true scope and correct interpretation of Sec.37(1), 80 HHB & Section 9(1)(i) r/w. Sec.4 & 5 of the Income Tax Act,1961 and other provisions and 2 whether on the facts and circumstances of the case and in law the Hon'ble Tribunal is right in allowing the appeal of the assessee and allowing the deduction of expenditure of Rs.14,31,730/- being the expenditure incurred for exploration and production of oil and gases. (2) Whether the true scope and correct interpretation of Sec.80 HHB of the Income Tax Act,1961 and other provisions and whether on the facts and circumstances of the case and in law the Hon'ble Tribunal is right in allowing the appeal of the assessee as to the deduction of Rs.6,27,12,192/- being the actual money brought into India in convertible Foreign Exchange. (3) Whether the true scope and correct interpretation of Sec.9(1)(i) read with Sec.4 and 5 of the Income Tax Act,1961 and other provisions and whether on the facts and circumstances of the case and in law the 3 Hon'ble Tribunal is right in allowing the exclusion of profit of Rs.14,79,10,603/- being the profit earned in Oman. 2. As regards the first question is concerned, the Counsel on both the sides agree that similar question raised by the Revenue in Income Tax appeal (Lodg.)no.921 of 2006 (C.I.T. vs. M/s.Essar Oil Ltd.) has been dismissed by us today i.e. on 16.10.2008. 3. So far as the second question is concerned, it is not in dispute that the assessee had executed certain contracts in the Countries viz. Oman and Qatar. The foreign currency earned from the said project was partially used for repaying the loan taken in foreign currency in the foreign country for executing the said project. The Tribunal relying on the decision of the Apex Court in the case “J.B.Boda and Co.Pvt.Ltd. Vs. Central Board of Direct Taxes, reported at 223 ITR 271” held that the assessee is entitled to claim deduction under section 80HHB of the Income tax Act in respect of the entire foreign currency earned from the aforesaid projects. 4 Although the decision of the Apex Court in the case “J.B.Boda and Co.Pvt.Ltd. Vs. Central Board of Direct Taxes, reported at 223 ITR 271” related to the deduction under section 80-O of the Income Tax Act, in our opinion, the ratio laid down therein would apply to the facts of the present case relating to grant of reduction under section 80 HHB of the Income Tax Act, because, the loan amount was paid in foreign currency is not disputed and even if the entire foreign currency was brought into India, the assessee would have been required to remit the foreign currency to discharge the loan taken in foreign currency for executing the project. Therefore, the second question raised by the revenue does not survive. 4. As regards the third question is concerned, it is not in dispute that the assessee has a permanent establishment at Oman and the assessee has been taxed in respect of the income earned from the said establishment under the provisions of the Income Tax law at Oman. Therefore, in the light of Article 7 of Double Taxation Avoidance Agreement (DTAA) entered 5 into by and between India and Oman and in the light of the judgment of the Apex Court in the case “CIT vs. P.V.A.L.Kulandagan Chettiar, 267 ITR 654”, the decision of the Tribunal in excluding the profit earned from the permanent establishment at Oman cannot be faulted. 5. In this view of the matter, we see no merit in the appeal and accordingly, the same is dismissed. (D.K.DESHMUKH, J.) (J.P.DEVADHAR, J.)