INCOME TAX ACT, 1961

Section 5

Income - Accrual of income - Retention money on contracts, whether to be included in assessee's income -

Assessee was engaged in contract business and in the memo of income, it had claimed deduction of the amounts retained by its clients as per the contracts. According to the assessee, as the amounts were not received, they cannot be considered as part of the income for assessment year. The original authority, while considering the decision of this court in CIT v. Ignifluid Boilers (P) Ltd. (2006) 283 ITR 295 (Mad) : 2006 TaxPub(DT) 1176 (Mad-HC), was of the view that since the issue was pending before the Supreme Court and that such a claim is of recurring nature, declined to extend the benefit to assessee. Held: The issue raised in this appeal had already been decided against the Department by Supreme Court in C. C. No. 4879 of 2006, dated 17-7-2006 (CIT v. Ignified Boilers India Ltd.) and in C. C. No. 9463 of 2006, dated 12-12-2006 [CIT v. East Coast Constructions and Industries Limited]. Tribunal was justified in holding that retention money on contract could not be included in the assessee's income and accordingly, appeal of Revenue was dismissed.

Followed:CIT v. East Coast Constructions and Industries Ltd. [C. C. No. 9463 of 2006, dated 12-12-2006 (SC)(SLP)], CIT v. Ignifluid Boilers (I) Ltd. (2006) 283 ITR 295 (Mad) : 2006 TaxPub(DT) 1176 (Mad-HC), CIT v. Ignified Boilers (I) Ltd. [C. C. No. 4879 of 2006, dated 17-7-2006 (SC)] and CIT v. Voltech Projects (P) Ltd. [TCA. No. 513 of 2014, dated 25-11-2014 (Mad)].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

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