Pr. Commissioner of Income-tax, Delhi-2 v. Bses Rajdhani Power Ltd
[Citation -2020-LL-0108-70]

Citation 2020-LL-0108-70
Appellant Name Pr. Commissioner of Income-tax, Delhi-2
Respondent Name Bses Rajdhani Power Ltd.
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 08/01/2020
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags higher rate of depreciation • electrical equipment • higher depreciation • written down value
Bot Summary: The Tribunal while passing the order dated 05.10.2015 remanded the matter to the file of the AO to determine the extent of electronic 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 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. The specific entries under which the depreciation was claimed by the assessee during the relevant assessment year reads as under: III. Machinery and Plant xxxxxx Energy saving devices, being- A. xxxx B. Instrumentation and monitoring system Automatic electrical load monitoring systems; Digital heat loss meters; xxxxxxxxx meter s for measuring heat losses, furnace oil flow, stream flow, electric energy and power factor meters Maximum demand indicator and clamp on power meters xxxxxxxxxx 12.2 The perusal of aforesaid provisions make it clear that item III(ix)(B)(e) of the depreciation schedule provides for higher rate of depreciation in respect of meters' for measuring ......... electric energy. 12.3 The submission of the assessee that there is no further/additional condition requiring the assessee to actually establish any direct relationship of the meters with the energy saved nor the said schedule also mandate that the energy meters should be electrical or mechanical devices and merely provides that the meters should be electricity/energy measuring devices finds substance. E. Electrical EquipmentTime of Day energy meters Xxxxxxxxxxxxxxxxxxxxxxxxxxxxx'' 12.4 The submission of the assessee that specifications contained in the energy meters installed by the assessee company also included the specific features of Time of Day has not been rebutted by the Revenue. To meet out this objection and its submissions before the Learned CIT that most of the meters are energy saving meters, the Learned AR has referred page No.75 of the supplementary paper book i.e. copy of the relevant extracts of the tax audit ITA 2/2020 ITA 3/2020 Page 7 of 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. 12.5 Regarding the claimed higher depreciation on the bus bar chamber, the Learned AR submitted that these are devices through which connection from overhead line/underground cable is provided to the meters and the said device forms integral/inextricable part of the meters without which the meter cannot function.


IN HIGH COURT OF DELHI AT NEW DELHI ITA 2/2020 PR. COMMISSIONER OF INCOME TAX, DELHI-2, ..... Appellant Through: Ms. Vibhooti Malhotra, Sr. Standing counsel with Mr. Shailender Singh and Mr. Sidharth Manocha, Advs. versus BSES RAJDHANI POWER LTD. ..... Respondent Through: Ms. Kavita Jha, Mr. Vaibhav Kulkarni and Mr. Udit Naresh, Advs. + ITA 3/2020 PR. COMMISSIONER OF INCOME TAX, DELHI-2, ..... Appellant Through: Ms. Vibhooti Malhotra, Sr. Standing counsel with Mr. Shailender Singh and Mr. Sidharth Manocha, Advs. versus M/S BSES RAJDHANI POWER LTD. ..... Respondent Through: Ms. Kavita Jha, Mr. Vaibhav Kulkarni and Mr. Udit Naresh, Advs. CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE SANJEEV NARULA ORDER % 08.01.2020 CM APPL. 248/2020 in ITA2/2020 and CM APPL. 265/2020 in ITA 3/2020 (exemptions) 1. Exemptions allowed, subject to all just exceptions. 2. applications stand disposed of. ITA 2/2020 & ITA 3/2020 Page 1 of 8 CM APPL. 249/2020 in ITA2/2020 and CM APPL. 266/2020 in ITA 3/2020 (delay in re-filing of 107 days) 3. By both these applications, applicant seeks condonation of delay of 107 days in re-filing applications. For reasons stated in applications, delay is condoned. 4. applications stand disposed of in aforesaid terms. ITA 2/2020 and ITA 3/2020 5. Issue notice. Learned counsel for respondent accepts notice. We have heard learned counsels. 6. following substantial question of law arises for our consideration: a. Whether Tribunal, while finding that Assessing Officer had gone beyond remand order dated 05.10.2015 and on that account setting aside order passed by Assessing Officer dated 31.03.2017, should have directed Assessing Officer to act strictly in terms of its earlier order of remand dated 05.10.2015? 7. Revenue is in appeal to assail order dated 25.03.2019 passed by Income Tax Appellate Tribunal (ITAT), Delhi Bench: 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. Tribunal has allowed said appeals of assessee along with several others, holding that Assessing Officer (AO) had gone beyond scope of remand as directed by ITAT in order dated 05.10.2015. ITA 2/2020 & ITA 3/2020 Page 2 of 8 8. On 05.10.2015, Tribunal had held in favour of assessee that it was entitled to depreciation at rate of 80% on electronic meters/energy meters. Tribunal also took note of submission of Revenue that more than 60% of meters are mechanically advanced meters which did not have any special feature entitling them to depreciation at rate of 80%. Another aspect before Tribunal was whether bus bars form integral/inextricable part of electronic meters/energy meters. Tribunal while passing order dated 05.10.2015 remanded matter to file of AO to determine extent of electronic meters/energy meters which were energy saving devices, since assessee would be entitled to 80% depreciation on such meters and not on other meters which could not be classified as energy saving devices. Tribunal also remanded issue-whether bus bars could be considered as integral/inextricable part of meters since depreciation at rate of 80% was claimed on bus bars by assessee on ground that it formed integral/inextricable part of meter on that premise only, high depreciation on meters at rate of 80% was claimed. Tribunal passed impugned order holding, that AO had exceeded his jurisdiction while dealing with remand, since he returned finding that electronic meters/energy meters were not energy saving devices and were therefore were not entitled to depreciation at rate of 80%. So far as issue of bus bars is concerned, he did not examine said issue at all. 9. submission of Ms. Malhotra is that although issue that electronic meters/energy meters as energy saving devices are entitled to 80% depreciations stands concluded by Tribunal, in its order dated ITA 2/2020 & ITA 3/2020 Page 3 of 8 05.10.2015 and this Court has also dismissed Revenue s appeal, vide order dated 14.09.2019 in ITA 666/2016, Tribunal should have ensured that matter attains finality by remanding matter back to AO with direction to act strictly in terms of order of remand dated 05.10.2015. issue as to what percentage of 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 AO in terms of remand order dated 05.10.2015 and therefore Tribunal should have ensured that AO undertakes said exercise and also determine whether bus bars form integral/inextricable part of meters. 10. Learned counsel for respondent submits that issue that electronic meters/energy meters, which are energy saving devices, are entitled to high depreciation at rate of 80% stand included by Tribunal, and as well as, by this Court and therefore AO cannot be permitted to re-open said issue. 11. We agree with submission of learned counsel for respondent. However, we also find that Tribunal stopped short of redirecting AO to deal with real issues, on which remand was made vide order dated 05.10.2015. Thus, those issues remain undetermined till date. In our view, Tribunal should have ensured that outstanding issues, in terms of remand order, attain finality one way or another. 12. We, therefore, answer question in favour of Revenue and remand back matter to AO with direction to strictly comply with order of ITA 2/2020 & ITA 3/2020 Page 4 of 8 remand dated 05.10.2015 passed by Tribunal which attained finality with dismissal of ITA No. 666/2016 preferred by appellant. AO shall limit his consideration strictly in terms of order of remand and in particular paragraphs Nos. 12 to 12.5 of order dated 05.10.2015, which read as follows:- 12. Considering above submission, we find that Learned CIT(Appeals) has agreed with submissions of assessee to this extent that meters are technologically advanced and are having features which can help consumers save energy but with human intervention. contention of assessee on other hand remained that energy meters acquired by assessee are in nature of energy saving equipment/devices having inter alia following advanced features helping in conservation of energy: i) Advanced feature of automatic electric load monitor time of day (TOD) displays, which indicates consumption at particular point of time during day that is relevant/ helpful in collecting data and devising reliable technical solutions; ii) Electricity leakage display (ELD) indicator, which glows in case of earth leakage/ faulty wiring at customer's premises; iii) Feature of indicating maximum demand which helps in regulating total energy load on distribution transformers; in case transformers are overloaded, it will result in increased technical losses iv) Accurate measurement of energy consumption, which arrests losses due to power theft; v) Provide load and energy data for proper management of energy/ power ITA 2/2020 & ITA 3/2020 Page 5 of 8 12.1 Section 32 of Income-tax Act, 1961 provides for allowance of depreciation in respect of block of assets at such percentage of written down value as may be prescribed. Under Item-111(8) of table rates of depreciation in "Old Appendix-!" to Income-tax Rules, 1962 is relevant for assessment year 2005-06 wherein depreciation @ 80% is available in respect .of equipment falling within category of "energy measuring meters". specific entries under which depreciation was claimed by assessee during relevant assessment year reads as under: "III. Machinery and Plant xxxxxx (8) (ix) Energy saving devices, being- A. xxxx B. Instrumentation and monitoring system (or monitoring energy flows: (a) Automatic electrical load monitoring systems; (b) Digital heat loss meters; xxxxxxxxx (e) meter s for measuring heat losses, furnace oil flow, stream flow, electric energy and power factor meters (f) Maximum demand indicator and clamp on power meters xxxxxxxxxx 12.2 perusal of aforesaid provisions make it clear that item III (8)(ix)(B)(e) of depreciation schedule provides for higher rate of depreciation in respect of "meters' for measuring ......... electric energy". 12.3 submission of assessee that there is no further/additional condition requiring assessee to actually establish any direct relationship of meters with energy saved nor said schedule also mandate that energy meters should be "electrical" or "mechanical" devices and merely provides that meters should be electricity/energy measuring devices finds substance. In aforesaid schedule, electricity ITA 2/2020 & ITA 3/2020 Page 6 of 8 measuring meters have been recognized as energy saving devices. We also find substance in contention of assessee that even if meter does not have any special features, accurate measurement of energy consumption by itself results in conserving energy in as much as it enables regulation of energy consumption and arrests losses due to power theft. "New Appendix-!" to Income- tax rules, 1962 which is relevant for assessment year 2006-07 and onwards, deprecation at rate of 80% is also available in respect of electrical equipment having been specific features of "time of day", as provided hereunder: ".E. Electrical Equipment (i)Time of Day (TOD) energy meters Xxxxxxxxxxxxxxxxxxxxxxxxxxxxx'' 12.4 submission of assessee that specifications contained in energy meters installed by assessee company also included specific features of "Time of Day" has not been rebutted by Revenue. We find that in depreciation schedule for assessment year 2006-07 and onwards specifically/separately covers feature of "Time of Day" under Item III (8)(ix) E(i). Under above facts and circumstances especially in view of above referred schedule read with sec. 32 of Income-tax Act, we find that assessee has been successfully able to demonstrate that it was very much entitled to claim depreciation on energy meters @ 80% and without appreciating above schedule, authorities below were not justified in disallowing claimed depreciation on these assets on ground that energy meters did not facilitate in conservation of energy. Assessing Officer had, however, pointed out that more than 60% of meters are mechanically advanced meters which did not have any special feature. To meet out this objection and its submissions before Learned CIT (Appeals) that most of meters are energy saving meters, Learned AR has referred page No.75 of supplementary paper book i.e. copy of relevant extracts of tax audit ITA 2/2020 & ITA 3/2020 Page 7 of 8 report of assessee for assessment year under consideration reflecting statement of particulars including bifurcation of expenses between normal meter and electronic meters. We thus set aside matter to file of Assessing Officer to verify and allow claimed depreciation at rate of 80% on electronic meters/energy meters only after affording opportunity of being heard to assessee. 12.5 Regarding claimed higher depreciation on "bus bar chamber", Learned AR submitted that these are devices through which connection from overhead line/underground cable is provided to meters and said device forms integral/inextricable part of meters without which meter cannot function. authorities below have denied claimed higher depreciation on this instrument on basis that these are not energy saving device. We set aside this matter to file of Assessing Officer to verify above claim of assessee that 'bus bar chamber' forms integral/inextricable part of meters without which meter cannot function and allow depreciation thereupon accordingly after affording opportunity of being heard to assessee. ground No.1 of appeal preferred by assessee is accordingly allowed for statistical purposes. 13. In View of above, appeals are disposed of. VIPIN SANGHI, J SANJEEV NARULA, J JANUARY 08, 2020 Pallavi ITA 2/2020 & ITA 3/2020 Page 8 of 8 Pr. Commissioner of Income-tax, Delhi-2 v. Bses Rajdhani Power Ltd
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