ACIT Vs PNC Rajasthan Highways Pvt. Ltd (ITAT Delhi)
The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2020–21. The assessee, an infrastructure construction company operating as a special purpose vehicle (SPV), had originally declared a loss of Rs. 24.33 crore. However, the Assessing Officer (AO) assessed income at Rs. 220.34 crore after making two additions: (i) Rs. 218.61 crore due to alleged differences between turnover reported in the Profit & Loss account and GST invoices, and (ii) Rs. 26.06 crore as interest income under section 56.
On appeal, the Commissioner (Appeals) deleted both additions. The Revenue challenged this before the Tribunal.
Regarding the first issue of turnover discrepancy, the assessee explained that it followed the mercantile system and IND-AS standards. The invoices reflected in GST returns related to milestone payments already received and accounted for in earlier financial years (2017–18 and 2018–19). These invoices were raised later only to comply with GST requirements once clarity emerged on taxability. Supporting evidence, including confirmations from NHAI, Form 26AS, and bank statements, demonstrated that the income had already been accounted for in earlier years.
During remand proceedings, the AO verified the additional evidence and acknowledged that the difference between GSTR-1 and the Profit & Loss account arose due to invoices pertaining to earlier years. The Commissioner (Appeals) concluded that the same income cannot be taxed twice and held that the addition was unjustified. The Tribunal noted that the AO’s remand report confirmed reconciliation of turnover and upheld the deletion, dismissing the Revenue’s grounds.
