PR. Commissioner of Income Tax, Delhi-2 v. BSES Rajdhani Power Ltd.

3. By both these applications, the applicant seeks condonation of delay of 107 days in re-filing the applications. For the reasons stated in the applications,the delay is condoned.

4. The applications stand disposed ofin the aforesaid terms. ITA 2/2020 and ITA 3/2020

5. Issue notice. Learned counsel for the respondent accepts notice. We have heard learned counsels.

6. Thefollowing substantial question oflaw arisesfor our consideration: a. Whether the Tribunal, whilefinding that the Assessing Officer had gone beyond the remand order dated 05.10.2015 and on that account setting aside the order passed by the Assessing Ojficer dated 31.03.2017, should have directed the Assessing Officer to act strictly in terms of its earlier order of remand dated 05.10.2015?

1. The Revenue is in appeal to assail the order dated 25.03.2019 passed by Income Tax Appellate Tribunal (ITAT), Delhi Bench: 'A' New Delhi in ITA No. 6225/Del/2018 pertaining to assessment year(AY)2008-09 and ITA No. 6224/Del/2018, pertaining to AY 2007-08. The Tribunal has allowed the said appeals ofthe assessee along with several others, holding that the Assessing Officer(AO)had gone beyond the scope ofremand as directed bytheITAT in order dated 05.10.2015. ITA 2/2020& ITA 3/2020 Page2of[8]

8. On 05.10.2015,the Tribunal had held in favour ofthe assessee that it was entitled to depreciation at the rate of 80% on electronic meters/energy meters. The Tribunal also took note ofthe submission ofthe Revenue that more than 60% ofthe meters are mechanically advanced meters which did not have any special feature entitling them to depreciation at the rate of 80%. Another aspect before the Tribunal was whether bus bars form an integral/inextricable part of the electronic meters/energy meters. The Tribunal while passing the order dated 05.10.2015 remanded the matter to the file ofthe AO to determine the extent ofelectronic meters/energy meters which were energy saving devices, since the assessee would be entitled to 80% depreciation on such meters and not on other meters which could not be classified as energy saving devices. The Tribunal also remanded the issue-whether the bus bars could be considered as an integral/inextricable part ofthe meters since the depreciation atthe rate of80% was claimed on bus barsbythe assessee onthe ground thatitformed an integral/inextricable partofthe meter onthatpremise only,the high depreciation on meters atthe rate of80% was claimed. The Tribunal passed the impugned order holding, that the AO had exceeded his jurisdiction while dealing with the remand, since he returned afinding thatthe electronic meters/energy meters were not energysaving devices and weretherefore were notentitled to depreciation at the rate of 80%. So far as the issue of bus bars is concemed, he did not examine the said issue at all.

9 The submission of Ms. Malhotra is that although the issue that electronic meters/energy meters as energysaving devices are entitled to 80% depreciations stands concluded by the Tribunal, in its order dated ITA 2/2020& ITA 3/2020 Page3of[8] ^'7 05.10.2015 and this Court has also dismissed Revenue's appeal, vide order dated 14.09.2019 in ITA 666/2016, the Tribunal should have ensured that the matter attains finality by remanding the matter back to the AO with a direction to act strictly in terms of the order of remand dated 05.10.2015. The issue as to what percentage of the meters are energy saving devices, being meters for measures of heat losses, furnace oil flow, steam flow, electric energy and power factor meters was not gone into by the AO in terms of the remand order dated 05.10.2015 and therefore the Tribunal should have ensured that the AO undertakes the said exercise and also determine whether the bus bars form an integral/inextricable part of the meters.

10. Learned counsel for the respondent submits that the issue that the electronic meters/energy meters, which are energy saving devices, are entitled to high depreciation at the rate of 80% stand included by the Tribunal, and as well as, by this Court and therefore the AO cannot be permitted to re-open the said issue.

11. We agree with the submission ofthe learned counselfor the respondent. However,we also find thatthe Tribunal stopped short ofredirecting the AO to deal with the real issues,on which the remand was made vide order dated 05.10.2015. Thus,those issues remain undetermined till date. In our view, the Tribunal should have ensured that the outstanding issues,in terms ofthe remand order,attain finality one way or another.

12. We,therefore,answerthe question in favour ofthe Revenue andremand back the matter to AO with a direction to strictly comply with the order of ITA 2/2020& ITA 3/2020 Page4of[8] remand dated 05.10.2015 passed by the Tribunal which attained finality with the dismissal ofITA No.666/2016 preferred by the appellant. The AO shall limit his consideration strictly in terms of order ofremand and in particular paragraphs Nos. 12 to 12.[5] of the order dated 05.10.2015, which read as follows:- "12. Considering the above submission, wefind that the Learned CIT(Appeals)has agreed with the submissions ofthe assessee to this extent that the meters are technologically advanced and are havingfeatures which can help consumers save energy but with human intervention. The contention ofthe assessee on the other hand remained that the energy meters acquired by the assessee are in the nature ofenergysaving equipment/devices having inter alia thefollowing advancedfeatures helping in conservation of. energy: i) Advancedfeature of automatic electric load monitor time ofday (TOD)displays, which indicates consumption at the particular point of time during the day that is relevant/ helpful in collecting data and devising reliable technicalsolutions; a) Electricity leakage display (ELD) indicator, which glows in case of earth leakage/ faulty wiring at customer'spremises; in) Feature of indicating the maximum demand which helps in regulating total energy load on the distribution transformers; in case the transformers are overloaded, it will result in increased technical losses iv)Accurate measurementofenergy consumption,which arrests losses due topower theft; v)Provide load and energy datafor proper management ofenergy/power ITA 2/2020& ITA 3/2020 PageSof[8] measuring meters have been recognized as energy saving devices. We alsofindsubstance in the contention ofthe assessee that even ifmeter does not have any specialfeatures, accurate measurement of energy consumption by itself results in conserving energy in as much as it enables regulation ofenergy consumption and arrests losses due to power theft. The New Appendix-1"to theIncome- tax rules, 1962 which is relevantjor assessmentyear2006-07andonwards,deprecation atthe rate of 80% is also available in respect ofelectrical equipment having beenspecificfeaturesof"time ofday",asprovidedhereunder:

Xxxxxxxxxxxxxxxxx (i)Time ofDay(TOD)energy meters Xxxxxxxxxxxxxxxxxxxxxxxxxxxxx" 124 Thesubmission ofthe assessee thatspecificationscontained in the energy meters installed by the assessee company also included the specificfeatures of"Time ofDay" has not been rebutted by the Revenue. We find that in the depreciation schedule for the assessment year 2006-07 and onwards specifically/separately coversfeature of"Time ofDay" under Item 111(8)(ix)-E(i). Under the above,facts and circumstances especiallyin view ofabove referredschedule readwithsec.52oj the Income-tax Act, we find that the assessee has been successfullyable to demonstrate thatitwasvery much entitledto claim depreciation on energy meters @ 80% and without 7 appreciating the above schedule, the authorities below were no justified in disallowing the claimed depreciation on these assets on the ground that the energy meters did not facilitate in conservation of energy. The Assessing Officer had, however pointedout that more than60%ofthe metersare mechanically advanced meters which didnothave anyspecialfeature. To meet out this objection and its submissions before the Learned CIT(Appeals)that most ofthe meters are energysaving meters, the Learned AR has referred page No.75 ofthe supplementary paper book i.e. copy ofthe relevant extracts ofthe tax audit Page 7of[8] ITA 2/2020& ITA 3/2020 (p measuring meters have been recognized as energy saving devices. We alsofindsubstance in the contention ofthe assessee that even ifmeter does not have any specialfeatures, accurate measurement of energy consumption by itself results in conserving energy in as much as it enables regulation ofenergy consumption and arrests losses due to power theft. The "New Appendix-!"to the Income- tax rules, 1962 which is relevantfor assessmentyear 2006-07and onwards, deprecation atthe rate of 80% is also available in respect ofelectrical equipment having been specificfeatures of"time ofday",asprovided hereunder:

Xxxxxxxxxxxxxxxxx (i)Time ofDay(TOD)energy meters Xxxxxxxxxxxxxxxxxxxxxxxxxxxxx'' 12.[4] The submission ofthe assessee thatspecifications contained in the energy meters installed by the assessee company also included the specific features of "Time ofDay" has not been rebutted by the Revenue. We find that in the depreciation schedule for the assessment year 2006-07 and onwards specifically/separately covers feature of "Time ofDay" under Item III (8)(ix)-E(i). Under the above facts and circumstances especially in view ofabove referredschedule read with sec. 32of the Income-tax Act, we find that the assessee has been successfully able to demonstrate that it was very much entitledto claim depreciation on energy meters @ 80%) and without appreciating the above schedule, the authorities below were not justified in disallowing the claimed depreciation on these assets on the ground that the energy meters did not facilitate in conservation of energy. The Assessing Officer had, however, pointed out that more than 60% ofthe meters are mechanically advanced meters which did not have anyspecialfeature. To meet out this objection and its submissions before the Learned CIT(Appeals)that most ofthe meters are energy saving meters, the Learned AR has referred page No.75 ofthe supplementary paper book i.e. copy ofthe relevant extracts of the tax audit ITA 2/2020& ITA 3/2020 Page 7of[8] report of the assessee for the assessment year under consideration reflecting statement of particulars including bifurcation of expenses between normal meter and electronic meters. We thus set aside the matter to thefile ofthe Assessing Officer to verify andallow the claimeddepreciation atthe rate of 80% on electronic meters/energy meters only after affording opportunity ofbeing heard to the assessee. 12.[5] Regarding the claimed higher depreciation on the "bus bar chamber", the Learned AR submitted that these are devices through which connectionfrom overheadline/undergroundcable is provided to the meters and the said device forms integral/inextricable part ofthe meters without which the meter W' cannotfunction. The authorities below have denied the claimed higher depreciation on this instrumenton the basis thatthese are not energy saving device. We set aside this matter to thefile of the Assessing Officer to verify the above claim ofthe assessee that 'bus bar chamber'forms integral/inextricable part of the meters without which a meter cannotfunction and allow the depreciation thereupon accordingly after affording opportunity ofbeing heard to the assessee. The ground No.1 ofthe appeal preferred by the assessee is accordingly allowedfor statistical purposes.

13. In View ofthe above,the appeals are disposed of.