DCIT Vs Azure Power (Raj) Pvt Ltd (ITAT Delhi)
Summary : The Income Tax Appellate Tribunal dismissed the Revenue’s appeal and upheld the deletion of an addition made under Section 69C of the Income Tax Act on account of alleged unexplained expenditure arising from differences between customs assessable value and invoice value of imported goods. The assessee, engaged in solar power generation, had imported modules and cable harnesses for setting up its solar plant and recorded the purchases in its books. The Assessing Officer treated the difference between the Customs Department’s assessable value and the invoice value as unexplained expenditure and taxed it under Section 69C read with Section 115BBE. However, the CIT(A) and Tribunal held that customs assessable value, determined for levy of customs duty, cannot automatically be treated as actual expenditure incurred by the assessee. Since the Revenue failed to establish that any unaccounted expenditure was actually incurred, invocation of Section 69C was held unsustainable and the addition was deleted.
Core Issue: The Assessing Officer made an addition under section 69C of ₹1,57,79,479 being the difference between the assessable value adopted by Customs authorities and the purchase value recorded in the books.
Facts: The assessee, engaged in solar power generation, imported cable harness and solar modules aggregating to ₹157.79 crore, which were fully capitalized in its books. As per CBEC data, the customs assessable value was ₹159.37 crore, resulting in a difference of ₹1.57 crore. The AO treated this differential amount as unexplained expenditure under section 69C and taxed it under section 115BBE.
