Topic: Sec 33ABA of income Tax Act, 1961: Site restoration Fund

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The Site Restoration Fund Section 33ABA and Rule 5AD are applicable to all assessees or taxpayers engaged in the business of: prospecting for petroleum or natural gas; extraction or production of petroleum or natural gas; or both in India. The Central Government has entered into an agreement with the assessee for such business.

Conditions led down: The Site Restoration Fund Section 33ABA and Rule 5AD the assessee must be satisfied following conditions:

1. Agreement with the Central Government: The Central Government has entered into an agreement with the assessee for such business.
2. Deposit of amount: The assessee must deposit an amount-
   • With the State Bank of India in an account (hereinafter referred to as a special account) maintained.
   • in an account (hereinafter referred to as the “Site Restoration Account”) opened by the assessee.
   • – in accordance with and for the purposes specified in a scheme approved by the Government of India in the Ministry of Petroleum & Natural Gas.

Treatment of interest: Any amount credited in the special account or site restoration account by way of interest shall be deemed to be a deposit.

1. Time of deposit: Such an amount must be deposited before the end of the previous year.
2. Audit of books of account: Accounts must be audited and the auditor’s report should be filed on Form 3AD along with the return of income.

In cases where the assessee is required under any other law to get his accounts audited, it shall be sufficient compliance if such an assessee gets the accounts audited under such law and furnishes the report of audit required under such other law and a report on Form 3AD.

Withdrawal from account:

• During continuation of business: The amount credited to such special account or the site restoration account shall be withdrawn only for the purpose(s) specified in respective scheme. If the amount withdrawn in a year is not utilized for the specified purpose in the same previous year then the amount not so utilized shall be treated as income of the year.

On closure of account: Where any amount standing to the credit of the assessee in the special account or in the site restoration account is withdrawn on closure of the account during any previous year, the following amount shall be deemed to be the profits & gains of business or profession (whether business is continued or not) – Amount so withdrawn from the account Less: Amount, if any, payable to the Central Government by way of profit or production share as provided in the agreement under section 42. The balance is taxable amount.