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2012 (10) TMI 436 - AT - Income TaxAddition on account of enhancement in respect of Retention Money claimed in revised return to be not accrued – Held that:- It is trite law that as for as possible the tax should be levied on real income. The issue of warranties can be dealt in two manners. If amounts are received than make a provision for warranties in P & L A/c on reasonable parameters which is conventionally allowed in IT assessments. In case of amounts not received, the second method can be to treat the unpaid amounts as not accrued pending settlement of express warranty issues, which is the situation in assesses case. The appellant has undertaken the project and was duty bound to give satisfactory performance as per warranty. For satisfactory execution of contract as also removal of defects ordained by the contract, certain sum is retained. Had the appellant provided for warranty in the accounts or claimed deduction as such, the same would have been allowed. Since the amount set apart being as per agreed terms and is contractually determined, even such provision would be allowable. Therefore looking from both angles, the retention money not payable to the appellant during the year is not accrued and hence not taxable during this year – Decided in favor of assessee Dis-allowance of Work Contract Tax – Section 43B – Revenue contended that appellant failed to furnish any details/evidence for claim of WCT and hence is not allowable – Held that:- When the tax is deducted by the client in accordance with WCT Act, so far as appellant being a contractor it can be treated to have paid such tax. The revenue cannot disallow the payment and at same time tax the sum received as refund out of such payment. Amounts are allowable u/s. 43 B - additions are therefore deleted for both the years. Dis-allowance of amount disallowed in A.Y. 2007-08 for nonpayment of TDS u/s. 40(a)(ia), which is paid during the relevant financial year and hence claimed as allowable under proviso to S40(a)(ia) – Held that:- Having disallowed such sum in A.Y. 2007-08 in view of sec. 40(a)(ia) and not sec. 37, it is not open for A.O. to examine them in AY 2008-09. Amount so disallowed for non deduction or non depositing tax before due date will be allowed as a deduction in computing the income of the previous year in which such TDS was paid to govt – Decided partly in favor of assessee
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