Public sector explorer ONGC is finding it hard to forego its claim of over Rs 3,000 crore as tax exemption. Citing legal precedents and reasoning, the oil major has again sought Cabinet secretariats approval to take a legal recourse before the income-tax appellate tribunal (ITAT). Earlier, the Cabinet secretariat had turned down the companys request to permit it to challenge the I-T department for denying tax benefits.

The matter relates to ONGCs tax assessment for the year 2002-03 and 2003-04, wherein the I-T department rejected the companys claim for tax deduction on commercial production of mineral oils. The committee on disputes (COD), which had to decide if the company could be allowed to move up in appeal, had concluded that there was no question of law involved that could necessitate a litigation before the ITAT.

ONGCs claim to seek review of the CODs decision was based itself on an analysis of the provisions under Section 80IB (9) of the Income-Tax Act, under which the exemptions had originally been sought. The said provisions, which provide a 100% tax holiday to undertakings that began commercial production of mineral oils in India, makes it mandatory for the assessee company to get the accounts for its undertakings audited.

 Justifying its claim, ONGC submitted before the committee the audited accounts for all the oil wells against which the exemptions have been sought. The company has also forwarded a copy of its petition to the petroleum ministry.

We once again request your goodself to kindly admit ONGCs review petition, as not only question of law and facts are involved and the amounts in dispute are far high to be ignored... Further adjudication by higher appellate authority will bring out the correct legal position on these issues, the companys petition said.

ONGCs review petition is also known to have made mention of a March 2008 order of ITATs Ahmedabad bench, upholding the decision of the income-tax appeals commissioner entitling a company a tax deduction in respect of production of mineral oils including natural gas of a companys oil wells. Another recent decision passed by the I-T department in a case pertaining to Oil India was also referred to, the officials said.