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2014 (11) TMI 286 - ITAT MUMBAIRetention money deleted – Held that:- The amount has been retained by the authorities as per the terms of contract for satisfaction of the various obligations and liabilities of the assessee under the contract - The assessee is recognizing the revenue from contract after reducing the amount retained by the authorities in pursuant to the terms of contract and offering the amount to tax on final settlement of account or on receipt of the retention money after deduction if any by the authorities - when the assessee is following this method of accounting regularly and consistently and which has been accepted by the AO in all the earlier years then the AO is not permitted to take a different view to de hors the principal of consistency until and unless the facts for the year warrants to take a different view – also in CIT Vs. Associated Cables (P) Ltd. [2006 (8) TMI 135 - BOMBAY High Court] it has been held that the right to receive the retention money is accrued only after the obligations under the contract are fulfilled and, therefore, it would not amount to an income of the assessee in the year in which the amount is retained – Decided against revenue. Labour charges and site expenses deleted – Held that:- The assessee has made the expenses of ₹ 58,17,088/- in cash and all the vouchers on the cash payment are not verifiable, therefore, the disallowance made by AO on these two accounts amounting to ₹ 25,00,000/- is excessive and very high, thus, a reasonable disallowance on these two accounts would be ₹ 2.50 lacs – the AO is directed to the disallowance to ₹ 2,00,000/- on account of labour charges and ₹ 50,000/- on account of site expenses – Decided partly in favour of revenue. Addition of purchases expenses deleted – Held that:- The AO issued the summons u/s 131 to the suppliers of the assessee from whom the assessee made the purchases - without discussing anything about the evidence produced by the assessee in respect of the claim except pointing out some wrong PAN No., the AO had made the addition on the basis of the report of the inspector of income tax - when the assessee has produced income tax returns, VAT returns and all other relevant documents and evidence to show the genuineness of the business transaction and purchase made by the assessee from these parties then the burden is shifted on the AO to prove the contrary - the return of income and confirmation filed by the assessee in respect of the claim which is not found to be false - when the assessee has produced all relevant evidence which could have been produced in respect of the claim of the purchases then in the absence of any contrary record or finding to the effect that the record produced by the assessee was not correct or genuine, the disallowance made by the AO merely on the basis of the report of inspector is not sustainable – the order of the CIT(A) is upheld – Decided against revenue.
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