Hindustan Zinc Ltd. Vs CIT (Rajasthan High Court)
Rajasthan High Court held that profits and gains generated by captive consumption of electricity is eligible for deduction under section 80-IA of the Income Tax Act. Accordingly, appeal of revenue dismissed.
Facts- The assessee company derives income from manufacturing of zinc, lead and its by-products. The assessment of the assessee was completed on 22.12.2006 u/s. 143(3) of the Act of 1961 on total income of Rs. 7,33,72,00,910/- wherein AO had allowed the deduction under Section 80-IA of the Act, 1961 of Rs.27,89,49,535/- in respect of the assessee’s Captive Power Plant. However, in the revisionary proceedings u/s. 263, the claim u/s. 80-IA was disallowed.
Being aggrieved, assessee preferred an appeal before CIT(A) and the same was allowed. Accordingly, the present appeal is preferred by revenue.
Conclusion- Held that the electricity generation is an eligible business and in light of the interpretation of word ‘derive’, the profits and gains generated by the captive consumption of electricity, as involved herein, fall within the purview of eligible deductions under Section 80-IA of the Act of 1961. Therefore, this Court holds that the finding of the Tribunal that the profits derived by the assessee’s power generation unit would be eligible for deduction as a separate undertaking under Section 80-IA of the Act of 1961 is justified. Thus, the aforesaid substantial questions of law stand answered in favour of the Assessee and against the Revenue.
