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2019 (3) TMI 1303 - AT - Income TaxAdditional depreciation on energy meters @80% - in the first round of proceeding ITAT directed the AO to allow depreciation @ 80% after verification - AO again disallow stating it as measuring instrument relying upon BIS report - non application of mind - HELD THAT - Tribunal in BSES Rajdhani Power 2015 (11) TMI 927 - ITAT DELHI categorically held that depreciation at 80% was available in respect of simplicitor electricity/energy measuring meters and there was no additional requirement of such meters being energy saving devices. Tribunal held that the assessee has successfully able to demonstrate that it was very much entitled to claim depreciation on energy meters @ 80%. The Tribunal has categorically given a finding on depreciation on energy meters @ 80% as only this much has to be verified by the AO as to whether it is inextricable/integral part of meters without which the meter cannot function and accordingly allow depreciation on the same. But instead of verifying these aspects, the AO has given a finding on the basis of Bureau of Indian Standards Report and relying on the same held that energy meter is merely a measuring instrument and not appliances which can be classified as energy efficient and hence was not eligible for depreciation at the higher rate of 80%. AR has given plethora of decisions including the decision in case of Union of India Vs. Kamlakshi Finance Corporation Ltd. 1991 (9) TMI 72 - SUPREME COURT OF INDIA wherein it is held that orders of High Court/ Appellate Authorities are binding and revenue interest is no excuse for failure of lower authorities to follow those orders as the law provides appeal procedure for safeguards. The principles of judicial discipline require that the orders of the higher appellate authorities shall be followed unreservedly by the subordinate authorities. AO is duty bound to follow the directions of the Tribunal in its true spirit and should have not gone beyond what has been directed to be verified by the Tribunal to the Assessing Officer. - Decided in favour of assessee.
Issues Involved:
1. Whether the CIT(A) erred in confirming the action of the Assessing Officer in passing an order contrary to the specific directions of the ITAT. 2. Whether the Assessing Officer was correct in re-adjudicating the issue of depreciation on Energy Meters in violation of ITAT and Delhi High Court decisions. 3. Whether the CIT(A) was justified in relying on the BIS report to deny higher depreciation on Energy Meters. 4. Whether the CIT(A) erred in denying higher depreciation on Bus Bar Chambers based on the eligibility of Energy Meters. Detailed Analysis: Issue 1: CIT(A) Confirming Action of Assessing Officer The CIT(A) confirmed the Assessing Officer's order, which the appellant claimed was in contravention of the ITAT's clear directions dated 05.10.2015. The ITAT had directed the Assessing Officer to verify whether a breakup between electronic and mechanical meters had been submitted and to allow depreciation on Electronic/Energy Meters at a higher rate of 80% after giving the assessee an opportunity to be heard. The CIT(A)'s confirmation was challenged on the grounds that it ignored the specific instructions of the ITAT. Issue 2: Re-adjudication by the Assessing Officer The ITAT had previously set aside the matter to the Assessing Officer to verify and allow the claimed depreciation at 80% on electronic meters/energy meters. However, the Assessing Officer, instead of following this directive, sought a report from the Bureau of Indian Standards (BIS) and held that Energy Meters were merely measuring instruments and not energy-efficient devices, thus not qualifying for higher depreciation. This action was claimed to be beyond the jurisdiction and mandate given by the ITAT and affirmed by the Delhi High Court. Issue 3: Reliance on BIS Report The CIT(A) upheld the Assessing Officer's reliance on the BIS report, which concluded that Energy Meters were not energy-efficient devices. This contradicted the ITAT's earlier ruling that 'Meters for measuring electric energy' are eligible for a higher depreciation rate of 80% as per the provisions of clause III (Plant and Machinery) (8)(ix) of part A to the rates of Depreciation in the Appendix to the I.T. Rules, without needing to satisfy any additional condition of being energy-efficient. Issue 4: Depreciation on Bus Bar Chambers The CIT(A) also denied higher depreciation on Bus Bar Chambers, reasoning that since Energy Meters were not eligible for higher depreciation, Bus Bar Chambers would also not qualify. This was contrary to the ITAT's direction to the Assessing Officer to merely verify if Bus Bar Chambers were an integral part of the Energy Meters and, if so, to allow depreciation at the higher rate of 80%. Conclusion: The ITAT, while reviewing the appeals, noted that the Assessing Officer had failed to comply with its specific directions and had instead relied on an ex-parte BIS report. The ITAT reiterated that the depreciation at 80% was applicable to Energy Meters as per the statutory provisions and that the Assessing Officer was only required to verify the type of meters and allow the depreciation accordingly. The ITAT quashed the assessment order and allowed the appeals, emphasizing that the Assessing Officer must follow the directions of higher appellate authorities unreservedly. Final Judgment: All the appeals filed by the assessee were allowed, and the assessment order was quashed. The ITAT underscored the principle that orders of higher appellate authorities are binding on subordinate authorities, and any deviation from such orders is not permissible. The order was pronounced in the Open Court on 25th March 2019.
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