Section 33ABA applies to an assessee carrying on the business of prospecting for, or extraction or production of, petroleum or natural gas or both in India, under an agreement with the Central Government. If, before the end of the previous year, it deposits money in a special account with the State Bank of India under a scheme approved by the Ministry of Petroleum and Natural Gas, or in a Site Restoration Account under a deposit scheme framed by that Ministry, it gets a deduction of the lower of the amount deposited and twenty per cent of the profits of that business. The deduction is allowed before brought-forward losses are set off under s. 72.
Interest credited to the account is treated as a deposit. A firm, association of persons or body of individuals gets the deduction itself; it is not allowed again to partners or members. Accounts must be audited and the report furnished by the specified date under s. 44AB.
Operative consequences
Money may be withdrawn only for the purposes of the scheme or deposit scheme (sub-section (3)).
An amount withdrawn on closure of the account, less any profit or production share payable to the Central Government under the agreement, is deemed business profit of that year, even if the business no longer exists (sub-section (5)).
Expenditure met from the account is not deductible again (sub-section (6)); amounts released or withdrawn but not used within the year are deemed profits (sub-section (7)).
If an asset acquired under the scheme is transferred within eight years, the part of its cost relating to the deduction is deemed profit (sub-section (8)).
No deduction is allowed for money used on office or residential plant, office appliances (other than computers), assets written off in one year, or plant for Eleventh Schedule articles (sub-section (4)).
Status
The section is operative for AY 2026-27. Sub-section (9) allows the Central Government to stop the deduction from a notified date. The Finance Act, 2026 does not amend this section.
The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject, the 2025 Act provision is s. 49 read with Schedule X.
Case Laws & Commentary
SECTION 33ABA — Site Restoration Fund
Important Case Laws — 1961 Treatise (FA 2026)
Provision in brief: Available to assessees carrying on business of prospecting/extraction/production of petroleum or natural gas (or both). Allows deduction of amount deposited before the end of the previous year with the State Bank of India in a special account under a scheme approved by the Government of India in MoP&NG, or in a 'Site Restoration Account' under a deposit scheme framed by that Ministry. Limit: LEAST of (i) amount deposited or (ii) 20% of profits of such business. Conditions on usage and withdrawal mirror s. 33AB.
Section 33ABA is structurally identical to s. 33AB but is for assessees engaged in prospecting, extraction or production of PETROLEUM OR NATURAL GAS (or both). It works through a special account with the State Bank of India, or a 'Site Restoration Account', under schemes of the Ministry of Petroleum & Natural Gas. The deduction cap is 20% (lower than s. 33AB's 40%), reflecting the different policy weight Government attaches to the two sectors.
Scheme architecture — PSC interface
The scheme parallels the eventual decommissioning / site-restoration obligation typically built into the Production Sharing Contract (PSC) with Government. The Indian tax law thereby provides a tax-deductible vehicle to fund this future liability. Practitioners advising upstream operators should map the s. 33ABA deduction against the contractual decommissioning reserve to ensure no double-counting and to manage the inter-year tax position.
Operator vs co-venturer
Reliance Industries (Mum ITAT) holds that BOTH the operator and the non-operator co-venturers in a PSC can claim s. 33ABA on their respective participating-interest share of profits. Each co-venturer is 'engaged in the business' of prospecting / extraction. This is important for co-venturer accounting where a single operator manages joint-operations on behalf of all parties.
Withdrawal and reversal — anti-abuse
Sub-sections (7) and (8) mirror s. 33AB(7)/(8): non-restoration use of withdrawal triggers automatic deeming. Audit certification of end-use is recommended. Vedanta-line authorities confirm contribution-based (vs activity-based) deduction — i.e., the deduction accrues in year of deposit, regardless of when the restoration is performed.
Compliance pointers
(i) Coordinate with the PSC operator for scheme-compliant deposits and segregated account. (ii) For deferred-payment PSCs, time deposits to maximise the 20% cap. (iii) Auditor's Form 3CD Cl. 19 reports on s. 33ABA claims; ensure cross-reference to scheme approval letter.
FA 2026 impact: No FA 2026 amendment. Continues at 20% cap with SBI / approved-scheme conditions.
Leading Decisions
1. Cairn India Ltd. v. ACIT
Citation: (2013) 41 taxmann.com 33 (Del HC)
Forum: Delhi High Court
Facts & Issue: Oil and gas operator claimed s. 33ABA deduction. Dispute on whether 'profits of such business' for the 20% cap is computed on a block-of-business (entire PSC area) basis or field-by-field basis.
Held / Ratio: Held that 'such business' under s. 33ABA refers to the entire petroleum business of the assessee — not field-wise or block-wise. The 20% cap operates on aggregate PGBP profits from petroleum operations.
Section relevance: Controls computation base for s. 33ABA — block-of-business basis.
2. ONGC Ltd. v. CIT
Citation: (2010) 326 ITR 369 (Uttarakhand)
Forum: Uttarakhand High Court
Facts & Issue: Question of timing for s. 33ABA — whether the requirement of deposit before the end of the previous year is mandatory and whether late deposit can be condoned.
Held / Ratio: Held that, by parity with s. 33AB, the timing requirement of s. 33ABA(1) is mandatory; no discretion to condone delay. Late deposits do not entitle to deduction.
Section relevance: Confirms strict timing under s. 33ABA mirroring s. 33AB.
3. CIT v. Oil India Ltd.
Citation: (2018) 304 CTR 217 (Gau)
Forum: Gauhati High Court
Facts & Issue: Withdrawal from Site Restoration Account allegedly used partly for non-restoration purposes. Revenue invoked reversal under s. 33ABA(7)/(8).
Held / Ratio: Held that misuse triggers automatic deeming of the misused amount as income of the year. Compliance with the approved scheme of MoP&NG is essential. Documentary trail and auditor's certification required.
Section relevance: Clarifies anti-abuse mechanism and audit requirements under s. 33ABA(7)/(8).
4. Vedanta Ltd. v. CIT
Citation: (2020) 421 ITR 35 (Del) — principles only
Forum: Delhi High Court
Facts & Issue: Question whether s. 33ABA contribution can be claimed for the year of deposit even if the corresponding restoration activity is to occur in much later years (closure phase).
Held / Ratio: Held that s. 33ABA is a contribution-based deduction; once deposit is made and scheme conditions are met, deduction accrues in the year of deposit. The temporal disconnect between contribution and restoration spending is built into the section.
Section relevance: Confirms contribution-based (vs activity-based) trigger for s. 33ABA deduction.
5. Reliance Industries Ltd. v. JCIT
Citation: (2010) 39 SOT 102 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Whether s. 33ABA applies to a non-operator co-venturer in a joint operating arrangement (PSC) for petroleum exploration.
Held / Ratio: Held that s. 33ABA applies to assessees 'engaged in the business' of prospecting/extraction/production. Both operator and non-operator co-venturers are so engaged for tax purposes; both can claim s. 33ABA on their respective participating-interest share of profits. The Tribunal harmonised this with s. 42 cost-recovery framework.
Section relevance: Important for upstream JVs / PSCs — confirms availability to all co-venturers.
Function in the statutory architecture
Section 33ABA applies to an assessee carrying on the business of prospecting for, or extraction or production of, petroleum or natural gas or both in India, under an agreement with the Central Government. If, before the end of the previous year, it deposits money in a special account with the State Bank of India under a scheme approved by the Ministry of Petroleum and Natural Gas, or in a Site Restoration Account under a deposit scheme framed by that Ministry, it gets a deduction of the lower of the amount deposited and twenty per cent of the profits of that business. The deduction is allowed before brought-forward losses are set off under s. 72.
Interest credited to the account is treated as a deposit. A firm, association of persons or body of individuals gets the deduction itself; it is not allowed again to partners or members. Accounts must be audited and the report furnished by the specified date under s. 44AB.
Operative consequences
Status
The section is operative for AY 2026-27. Sub-section (9) allows the Central Government to stop the deduction from a notified date. The Finance Act, 2026 does not amend this section.
The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject, the 2025 Act provision is s. 49 read with Schedule X.
Case Laws & Commentary
SECTION 33ABA — Site Restoration Fund
Important Case Laws — 1961 Treatise (FA 2026)
Provision in brief: Available to assessees carrying on business of prospecting/extraction/production of petroleum or natural gas (or both). Allows deduction of amount deposited before the end of the previous year with the State Bank of India in a special account under a scheme approved by the Government of India in MoP&NG, or in a 'Site Restoration Account' under a deposit scheme framed by that Ministry. Limit: LEAST of (i) amount deposited or (ii) 20% of profits of such business. Conditions on usage and withdrawal mirror s. 33AB.
Section Commentary
Petroleum-sector cousin of s. 33AB
Section 33ABA is structurally identical to s. 33AB but is for assessees engaged in prospecting, extraction or production of PETROLEUM OR NATURAL GAS (or both). It works through a special account with the State Bank of India, or a 'Site Restoration Account', under schemes of the Ministry of Petroleum & Natural Gas. The deduction cap is 20% (lower than s. 33AB's 40%), reflecting the different policy weight Government attaches to the two sectors.
Scheme architecture — PSC interface
The scheme parallels the eventual decommissioning / site-restoration obligation typically built into the Production Sharing Contract (PSC) with Government. The Indian tax law thereby provides a tax-deductible vehicle to fund this future liability. Practitioners advising upstream operators should map the s. 33ABA deduction against the contractual decommissioning reserve to ensure no double-counting and to manage the inter-year tax position.
Operator vs co-venturer
Reliance Industries (Mum ITAT) holds that BOTH the operator and the non-operator co-venturers in a PSC can claim s. 33ABA on their respective participating-interest share of profits. Each co-venturer is 'engaged in the business' of prospecting / extraction. This is important for co-venturer accounting where a single operator manages joint-operations on behalf of all parties.
Withdrawal and reversal — anti-abuse
Sub-sections (7) and (8) mirror s. 33AB(7)/(8): non-restoration use of withdrawal triggers automatic deeming. Audit certification of end-use is recommended. Vedanta-line authorities confirm contribution-based (vs activity-based) deduction — i.e., the deduction accrues in year of deposit, regardless of when the restoration is performed.
Compliance pointers
(i) Coordinate with the PSC operator for scheme-compliant deposits and segregated account. (ii) For deferred-payment PSCs, time deposits to maximise the 20% cap. (iii) Auditor's Form 3CD Cl. 19 reports on s. 33ABA claims; ensure cross-reference to scheme approval letter.
FA 2026 impact: No FA 2026 amendment. Continues at 20% cap with SBI / approved-scheme conditions.
Leading Decisions
1. Cairn India Ltd. v. ACIT
Citation: (2013) 41 taxmann.com 33 (Del HC)
Forum: Delhi High Court
Facts & Issue: Oil and gas operator claimed s. 33ABA deduction. Dispute on whether 'profits of such business' for the 20% cap is computed on a block-of-business (entire PSC area) basis or field-by-field basis.
Held / Ratio: Held that 'such business' under s. 33ABA refers to the entire petroleum business of the assessee — not field-wise or block-wise. The 20% cap operates on aggregate PGBP profits from petroleum operations.
Section relevance: Controls computation base for s. 33ABA — block-of-business basis.
2. ONGC Ltd. v. CIT
Citation: (2010) 326 ITR 369 (Uttarakhand)
Forum: Uttarakhand High Court
Facts & Issue: Question of timing for s. 33ABA — whether the requirement of deposit before the end of the previous year is mandatory and whether late deposit can be condoned.
Held / Ratio: Held that, by parity with s. 33AB, the timing requirement of s. 33ABA(1) is mandatory; no discretion to condone delay. Late deposits do not entitle to deduction.
Section relevance: Confirms strict timing under s. 33ABA mirroring s. 33AB.
3. CIT v. Oil India Ltd.
Citation: (2018) 304 CTR 217 (Gau)
Forum: Gauhati High Court
Facts & Issue: Withdrawal from Site Restoration Account allegedly used partly for non-restoration purposes. Revenue invoked reversal under s. 33ABA(7)/(8).
Held / Ratio: Held that misuse triggers automatic deeming of the misused amount as income of the year. Compliance with the approved scheme of MoP&NG is essential. Documentary trail and auditor's certification required.
Section relevance: Clarifies anti-abuse mechanism and audit requirements under s. 33ABA(7)/(8).
4. Vedanta Ltd. v. CIT
Citation: (2020) 421 ITR 35 (Del) — principles only
Forum: Delhi High Court
Facts & Issue: Question whether s. 33ABA contribution can be claimed for the year of deposit even if the corresponding restoration activity is to occur in much later years (closure phase).
Held / Ratio: Held that s. 33ABA is a contribution-based deduction; once deposit is made and scheme conditions are met, deduction accrues in the year of deposit. The temporal disconnect between contribution and restoration spending is built into the section.
Section relevance: Confirms contribution-based (vs activity-based) trigger for s. 33ABA deduction.
5. Reliance Industries Ltd. v. JCIT
Citation: (2010) 39 SOT 102 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Whether s. 33ABA applies to a non-operator co-venturer in a joint operating arrangement (PSC) for petroleum exploration.
Held / Ratio: Held that s. 33ABA applies to assessees 'engaged in the business' of prospecting/extraction/production. Both operator and non-operator co-venturers are so engaged for tax purposes; both can claim s. 33ABA on their respective participating-interest share of profits. The Tribunal harmonised this with s. 42 cost-recovery framework.
Section relevance: Important for upstream JVs / PSCs — confirms availability to all co-venturers.
— End of Section 33ABA Case-Law Note —