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2020 (2) TMI 346 - AT - Income TaxDisallowance of expenditure towards retention money/security deposited KID, EOT etc. which resulted in reduction of taxable income - HELD THAT:- The assessee in the instant case, claims that a certain portion of bill has been kept as a lien in the custody of the contractee till the fulfillment of the conditions specified in the contract. Naturally, such retention money would accrue only where the terms of the contract stands fulfilled. In the absence of its accrual, the income cannot be taxed under mercantile system of accounting on a hypothetical basis. We find considerable force in the aforesaid plea of the assessee. It is not the case of the Revenue that the work under the contract has been completely fulfilled. The unrealized portion of the bills raised by the contractor assessee is in the league of contingent income until and unless the terms and conditions of the contract stands fulfilled. We find complete merit in the argument laid on behalf of the assessee on this score. When seen differently, we also find substance in the case made out that the assessee has booked the unrealized portion of the bill in the year of realization as and when happened. Therefore, the action of the assessee does not cause any prejudice to the Revenue and is tax neutral. In such circumstances, when seen in combination, we are inclined to accept the claim of the assessee for non-taxability of unrealized income kept in the custody of the contractee as per the terms of the contract. For the reasons narrated, we set aside the order of the CIT(A) and direct the AO to delete the disallowance of expenditure Chargeability of interest u/s 234B - HELD THAT:- As relying on M/S ANAND VIHAR CONSTRUCTION PVT. LTD. AND VICE-VERSA. [2018 (11) TMI 1738 - ITAT RANCHI] AO is directed to delete the levy of interest under s.234B of the Act.
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