TMI Blog1998 (8) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... ractor for Spie Capag NKK Toyo Consortium as per agreement dated 21st June, 1986. Similar work was also carried for Dodsal Pvt. Ltd. on the terms and conditions specified in the agreement dated August 7, 1986. The main contractors laid pipelines for the Gas Authority of India (GAIL). The above documents contain scope of work and terms of payment. In the agreement dated June 21, 1986, it is provided that the assessee would raise monthly invoices in respect of services rendered on the contractor for payments. Out of the bill amount 5% retention money would be deducted which will be released as follows :- 5% will be released after successful completion of hydro test and after CCS have submitted all documents (records, films with approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim over the entire amount. The retention money might not have been received by the assessee, but it was vested in the assessee-company. As fulfilment of contractual obligation was entirely in the hands of the assessee, the receipt was in no way contingent. The Assessing Officer also attached lot of importance to certificate of the Auditor who had audited the books of account and held that the credit of retention money reflected true and fair view. Thus, the retention money was held to be chargeable to tax. 4. The assessee impugned the above addition in appeal, but remained unsuccessful. The learned CIT(Appeals) echoed the reasoning of the Assessing Officer to justify the addition. He further held that if advance made to the assessee cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,09,010 for the following reasons : (1) that the assessee was raising bills for the gross amount of work completed which included retention money. The justification for this was stated to be the fact that T.D.S. was deducted from the full amount of bill. (2) that the retention money was received and stood vested in the assessee in the period under consideration. (3)that happening of event relation to issuance of completion certificate was in the hands of the assessee and not a contingent happening. (4) that the Auditor M/s. M.P. Khanwala Co. audited the accounts and certified the accounts as true and fair. The accounts contained credit entry of retention money in the Profit Loss Account. The assessee was following mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract, the retention money would be released and the assessee would acquire the right to receipt such retention money. Therefore, on the date when the bills were submitted, having regard to the nature of the contract, no enforceable liability accrued or arose and, accordingly, it could not be said that the assessee had any right to receive the entire amount on the completion of the work or on the submission of bills. The assessee had no right to claim any part of the retention money till the verification of satisfactory execution of the contract. Therefore, the Tribunal was right in holding that the retention money in respect of the jobs completed by the assessee during the relevant previous year should not be taken into account in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight must emerge from the contract between the parties. From the facts set out hereinbefore, we find that the entire amount of bill did not become due immediately upon its submission, but 5 per cent and 10 per cent of the bill amounts, as the case may be, were withheld as security. Having regard to the terms of contract, there can be no dispute that the assessee had no right to receive the retention money which was to become due only on completion of the entire contract and furnishing of requisite certificate. The payment of retention money was deferred as per the contract in spite of job carried and bills submitted. The payment of retention money was contingent on satisfactory completion of work and its certification. Till then there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral is that the assessee failed to debit the liability in its books of account and, therefore, it was debarred from claiming the same as deduction either under section 10(1) or under section 10(2)(xv) of the Act. We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although, under the law, a deduction must be allowed by the Income-tax Officer, the assessee will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provisions of law relating thereto and not on the view which the assessee might take of his rights nor can the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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