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[2026:RJ-JD:45394-DB]

REPORTABLE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR Judgment reserved on: 17/09/2026 Judgment delivered on: 05/10/2026 Judgment (Full) uploaded on: 05/10/2026 D.B. Income Tax Appeal No. 183/2014 CNR: RJHC010166092014 | URN: ITA / 270U / 2014 Commissioner of Income Tax, Udaipur ----Appellant Versus M/s Hindustan Zinc Ltd., Yashad Bhawan, Udaipur ----Respondent For Appellant(s) : Mr. KK Bissa Mr. HG Chanda For Respondent(s) : Mr. Ajay Kumar Vohra Sr. Adv (through VC) assisted by Mr. Anjay Kothari Mr. Rohit Jain Mr. Ram Krisan Rao Mr. Amit Sharma DIVISION BENCH HON'BLE THE CHIEF JUSTICE MR. SANJAY K. AGRAWAL HON'BLE MR. JUSTICE VINIT KUMAR MATHUR C.A.V. JUDGMENT Sanjay K. Agrawal, CJ:

1. Two substantial questions of law formulated on 26.04.2016 and 14.09.2026 for decision of the present appeal, preferred under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), read as under:

“1. Whether on the facts and in the circumstances of the case, the ITAT was justified in allowing the claim of the assessee for additional depreciation under Section

32(1)(iia) of the Income Tax Act?

2. Whether the I.T.A.T. was justified in holding that the PCIT is not justified in exercising the power under Section 263 of the Income Tax Act by recording a finding which is perverse to the record?”

[For the sake of convenience, the appellant herein would be referred to as ‘the Revenue’ and the respondent would be referred to as ‘the assessee’.]

2. The assessee-company is engaged in the business of zinc, lead, silver etc. and filed its return of income for Assessment Year 2007-08, declaring the taxable income of Rs.58,43,88,93,250/-. While filing the aforesaid return of income, the assessee claimed additional depreciation of Rs.18,87,27,973/- under Section 32(1) (iia) of the Act of 1961 in respect of new plant and machinery installed at Captive Power Plant, Chanderia (for short ‘CPP’) (Rs.9,90,887/-) and Wind Power Plant (for short ‘WPP’)

(Rs.18,77,37,086/-).

3. The case of the assessee was selected for scrutiny and assessment and an assessment order dated 23.03.2009 came to be passed by the Assessing Officer under Section 143(3) of the Act of 1961, determining the taxable income of the assessee at Rs.61,65,85,62,500/- after making certain additions and disallowances. It is the case of the assessee that the additional depreciation claimed by it in the return of income in respect of CPP and WPP was accepted and allowed by the Assessing Officer while completing the scrutiny assessment and passing the assessment order for Assessment Year 2007-08.

4. The revisional authority i.e. Commissioner of Income Tax (for short ‘the CIT’), while exercising the revisional power under Section 263 of the Act of 1961, by order dated 14.03.2011 set aside the assessment order dated 23.03.2009 and directed the Assessing Officer to pass fresh assessment order, inter alia, for the reason that additional depreciation under Section 32(1)(iia) of the Act of 1961 is available to an assessee, who is engaged in manufacturing and production of an article or thing and since the assessee is generating power from CPP and WPP, which does not amount to manufacture or production of an article or thing, the assessee is not entitled for additional depreciation under Section

32(1)(iia) of the Act of 1961.

5. Feeling dissatisfied and aggrieved by the order of the CIT dated 14.03.2011, invoking revisional jurisdiction under Section 263(1) of the Act of 1961, the assessee preferred an appeal under Section 253 of the Act of 1961 before the Income Tax Appellate Tribunal (for short ‘the ITAT’) branding the same as unsustainable and stating that Section 263 of the Act of 1961 is not attracted and thus the CIT could not have invoked power and jurisdiction under Section 263 of the Act of 1961.

6. The ITAT, by the impugned order dated 28.02.2014, allowed the appeal of the assessee and set aside the order passed by the CIT u