Assessee's Appeals Allowed, ITAT Quashes Assessment Order, Emphasizes Adherence to Higher Authority Directions

The appeals filed by the assessee were allowed, and the assessment order was quashed by the ITAT. The ITAT emphasized that the Assessing Officer must adhere to the specific directions provided by higher appellate authorities and not rely on extraneous reports. The judgment highlighted that Energy Meters were eligible for higher depreciation at 80% as per statutory provisions, and the Assessing Officer's failure to comply led to the overturning of the assessment order.

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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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