IndianOil seeks tax holiday for Panipat refinery
New Delhi   10-Jun-2008
State-run IndianOil has made a strong pitch for a tax holiday by notifying the Panipat refinery additional expansion project under section 80 IB of the Income tax Act IndianOil's plea to the Centre comes dose on die heels of the Centre notifying the Paradip refinery for sops, under die same section of the Income Tax Act, Sources told FE that IndianOil is implementing the Panipat refinery additional expansion project, with an investment of Rs l, 107 crore.The project is designed to meet die ballooning demand of petroleum products in the northern par of the country. The refinery major has affirmed that die project should be complete by December 2009, making it eligible for the benefits of the seven-year tax holiday. Section 80-IB provides for a 100% tax holiday for seven years, with respect to profits derived froman undertaking involving production or refining of mineral oils. However, IndianOil has brought to the petroleum ministry's notice that the Finance Bill of 2008 had introduced a sunset clause in the section, according to which the tax holiday benefit would not be available to an undertaking, which commences refining on or after April 1, 2009, unless it is wholly owned by a public sector company. The undertaking should also be notified by the Centre on or before May 31,2008, and begin refining on or before March 31,2012. According to IndianOil, the Panipat refinery additional expansion project is being executed under a revised implementation strategy that envisages utilizing the already procured equipment to increase the capacity from 6 million tone per annum (mmpta) to 7.5-mmp-tainstead of revamping the unit, as originally planned. The revised strategy was necessary as IndianOil found Engineers India Ltd's (EEL) quotation of a 177-day shut down for implementing the project as unacceptable. This was because it would imply that major units would remain shut for almost six months, which would translate into non-availability of petroleum products.