COMMISSIONER OF INCOME TAX Vs. HINDUSTAN ZINC LTD.

JUDGEMENT

(1.) THIS appeal under Section 260A of the IT Act, 1961 (in short 'the Act of 1961' hereinafter) is directed against order dt. 16th Oct., 2001 passed by the Income -tax Appellate Tribunal, Jodhpur Bench, Jodhpur (in short 'Tribunal' hereinafter), whereby an appeal filed by the Revenue against the order dt. 20th Feb., 1994 passed by the Commissioner of Income -tax (Appeals), Udaipur [in short 'CIT(A)' hereinafter] setting aside the order passed by the Assessing Officer (in short 'AO' hereinafter) dt. 28th Oct., 1993 to the extent of disallowing certain expenditure, stands dismissed.

(2.) THE return for the asst. yr. 1991 -92 was filed by the assessee on 13th Dec, 1991 showing a total income of Rs. 3,41,99,319. However, a revised return was filed by the assessee on 4th Jan., 1993 showing loss of Rs. 43,72,27, 027. In the revised return, the assessee claimed deduction under Section 37 of the Act of 1961 on account of investment in construction of Ghosunda Dam as revenue expenditure. The expenditure was incurred by the assessee in construction of part of the dam inasmuch as, it required large quantity of water for day -to -day operation of its super smelter located at Chanderia. The AO disallowed the same on the ground that the expenditure incurred in construction of Ghosunda Dam was of capital nature. That apart, the deduction claimed by the assessee in respect of expenditure on the guest house was also disallowed by the AO.

(3.) ON further appeal by the Revenue, the order passed by the CIT(A) as aforesaid has been confirmed by the Tribunal. The Tribunal arrived at the finding that the object and effect of the expenditure incurred by the assessee company in construction of the Ghosunda Dam is facilitating the assessee's trade operation and enabling the management to conduct business more efficiently or more profitably, therefore, the same are allowable deductions. Accordingly, the Tribunal declined to interfere with the order passed by the CIT(A). Relying upon the decision of the various High Courts, the expenses incurred by the assessee company in respect of the guest house were also held to be allowable deduction by the Tribunal. Hence, this appeal at the instance of Revenue.