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2012 (12) TMI 66 - ITAT NEW DELHIMobilization Advance - Mobilisation advance which is initially released against Bank Guarantee is to extend financial assistance within the terms of contract to the contractor to mobilize the man and material resource for timely and smooth take off of the project or procurement of equipment, material or other services contract. ”The amount received as mobilization advance is not towards a contract receipt, but is merely an advance for mobilizing resources by the assessee for carrying out the work of its customer/client. This amount is required to be adjusted proportionately against the running bills for the work certified. The amount of mobilization account that has been adjusted during the year under consideration has been included as assessee’s income whereas the balance outstanding remains as a current liability for the year. The same is liable to be adjusted against the future running bills in the subsequent year. Essential this receipt was not in the nature of income. Merely because tax at source has been deducted by the builder, the receipt of mobilization money cannot be deemed as income of the assessee for the year under consideration - no error in the decision reached by CIT (A) in deleting the addition on this count - no merit in this ground raised by the revenue, the same stands rejected. Treatment of Outstanding liability as Ceased Liability u/s 41 (1) - Held that:- This is a case of a private limited company wherein the liabilities are appearing in its books of account. The balance sheet being a public document, it cannot be said that the assessee has not acknowledged the debt towards its creditors. The liability under the circumstances cannot be taken to be a ceased liability - CIT (A), therefore, cannot be said to have erred in deleting the addition. As provisions of Section 41 (1) of the Act are not applicable to a case like this and finding no merit in this ground, the same is also rejected. Decision in Commissioner of Income-Tax Versus Sugauli Sugar Works Pvt. Limited [1999 (2) TMI 5 - SUPREME COURT] followed - In the result, appeal filed by Revenue is dismissed.
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