C I T Udaipur vs M/S Hindustan Zinc Ltd Udaipur
2023 Latest Caselaw 267 Raj

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 7/2004

Commissioner of Income Tax, Udaipur

----Appellant Versus M/s Hindustan Zinc Ltd., Yashad Bhawan, Udaipur

----Respondent

For Appellant(s) : Mr. K.K. Bissa For Respondent(s) : Mr. Anjay Kothari

HON'BLE MR. JUSTICE SANDEEP MEHTA HON'BLE MS. JUSTICE REKHA BORANA

Order

09/01/2023

The present income tax appeal was admitted on 12.02.2004

while framing the following substantial questions of law:

"1. "Whether on the facts and in the circumstances of the case, the Hon'ble ITAT has grossly erred in law in upholding the order of the CIT(A) ignoring:

(i) the legal position that expenditure incurred on a new project can not be considered as revenue expenditure on expansion even through the assessee is in the same line of business; and

(ii) the fact that expenditure incurred on exploring lead at Dhukanda mines and on laying new water pipe line from Gosunda Dam, has undoubtedly brought in/produced enduring benefit to assessee?"

Learned counsel for the revenue candidly admitted that the

issue is no more res integra and has been decided against the

Revenue by the Division Bench of this Court in the case of

Commissioner of Income-tax vs. Hindustan Zinc Ltd.

reported in [2009] 221 CTR 631 (Rajasthan) decided on

30.01.2009 and the special leave petition being Special Leave to

Appeal (Civil) No.28563/2009 preferred by the Department

(2 of 2) [ITA-7/2004]

against the said judgment has also been dismissed vide order

dated 18.07.2011.

In the case of Hindustan Zinc Ltd. (supra), the Division

Bench held as under:

"Adverting to the facts of the present case, admittedly, the assessee's super smelter plant requires adequate quantity of water for its operation and unless and until, water is available, the super smelter plant would not function and would not be able to produce any items. Admittedly, the Ghosunda Dam has been constructed by the State Government and the assessee has made expenditure for its alteration so as to ensure sharing of the water with the State Government without having any right or ownership in the dam or the water. Even, the assessee's share of water is also determined by the State Government. Thus, the expenditure incurred by the assessee for commercial expediency relates with carrying on of business and falls within such matter expenditure as prudent businessman may incur for the purpose of the business. The operational expenses incurred by the assessee solely intended for furtherance of the enterprise can be no means be treated as expenditure of capital nature."

In view of the ratio as laid down in the case of Hindustan

Zinc Ltd. (supra), the present appeal stands dismissed.

(REKHA BORANA),J (SANDEEP MEHTA),J

85-T.Singh/-

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