TMI Blog1995 (3) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... works and interiors (M/s. Rupayan Associates Pvt. Ltd.) that is the assessee. The assessee was given advances from time to time by the Bank to carry out the work allotted and on completion of the works during the previous year relevant to assessment year under appeal, the assessee submitted its final bill to the Bank on 29-3-1990. The Assessing Officer noted that while the assessee had sent its final bill to the Bank, it had accounted for all but an amount of Rs. 15,78,434 as its income for the earlier previous years as also the current previous year, the amount of Rs. 15,78,434 was shown as a liability in its balance-sheet (under the head Advances) in the name of the Bank and in the remarks column of the details of Advances it was shown as 'disputed and outstanding'. He took the matter with the assessee when it was explained that the relevant bills were pending certification with the Architects M/s. JSA and as the assessee is showing its income only of those amounts which are certified by the Architects during a particular previous year, the amount of Rs. 15,78,434 could not be treated as its income by the assessee for the previous year ending 31-3-1990. It was submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me for the relevant assessment year. In reply the assessee admitted that there was no dispute with the Bank. It also admitted that it is the Bank which has made payments directly to the assessee. It however, pointed out that the work done by it was required to be checked upon by the Architects and any defects pointed out were to be removed by the assessee and the items involving claim of Rs. 15,78,434 were not cleared till the end of account period. It submitted that out of Rs. 55,38,641 a sum of Rs. 8,46,699 was credited during the relevant previous year while sum of Rs. 30 lakhs and odd was credited by the assessee to the profit loss account in the earlier years. Thus, according to the assessee pending clearance for the Architects the assessee could not legitimately treat the amount of Rs. 15,78,434 as its income for the year ending 31-3-1990 notwithstanding the fact that it has completed the contract and the Bank had also stated as such. The AO was not satisfied with the claim made by the assessee when he noted that the assessee was dealing with a Bank and unless they were satisfied with the completion of work to their satisfaction they would not release/adjust the payments. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d control the work to enable the Bank to settle the bills of the contractors and even to certify advance payments to the contractors based on their bills and finally to clear the bills as per their certification. He submitted that with regard to the contract with the Bank the assessee has been following a system of accounting under which it takes into account only those bills which are certified by the appointed Architects. M/s. JSA and pending that the assessee does not acquire any right over the amounts involved as its income. Since certification of the Architects on assessee's bills for Rs. 15,78,434 was pending as on 31st March, 1990 that amount was not shown as the assessee's income, the same having not become legally due to the assessee. 'According to the learned AR the assessee has recorded its income as relating to the work only when the bills raised by the assessee against the Bank are certified by the Architects M/s. JSA and, therefore, in the absence of certification of bills involved for Rs. 15,78,434 the assessee legally could not treat the same as its income. In support of his proposition, the learned Authorised Representative has placed reliance on Patna High Court j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so addition on account of work-in-progress would not be equal to the amount of bills. The learned Authorised Representative also submitted that the ratio of Hon'ble Supreme Court in British Paints India Ltd.'s case is not applicable to the facts and circumstances of the case, inasmuch as the assessee is not taking the value of bills as its closing stock and, therefore, the question of valuation thereof does not arise. Shri Syali submitted that the learned CIT (Appeals) did not upheld the addition on this count either. He submitted that the Revenue is admittedly not in appeal and, therefore, it is precluded from arguing the issue from this angle, i.e., the bills raised represented work in progress. In support of his proposition, the learned Authorised Representative has also placed reliance on Karnataka High Court judgment in the case of Karnataka State Forest Industries Corpn. Ltd. v. CIT [1993] 201 ITR 674 and Andhra Pradesh High Court (Full Bench) in the case of CIT v. Begum Noor Banu Alladin [1993] 204 ITR 166. After hearing the learned representative of the parties and having also perused the relevant record, we find ourselves in agreement with Shri Syali. the learned Authorise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk to the assessee). It is the claim of the assessee that as the Bills involving amounts of Rs. 15,78,434 were pending certification with the Architects, the amount involved could not be treated as its income unless there was actual certification, which according to the assessee came some time in account period relevant to assessment year 1992-93 and the amount stood treated as its income for the same period. We cannot, however, accept the proposition of the learned Authorised Representative for the assessee that unless the relevant bills were certified by the Architects, the amount involved could not be treated as its income. What is to be seen is the conduct of the parties to the contract, i.e., between the Bank and the assessee, there being admittedly no written contract. The assessee has admittedly completed the job during the relevant previous year as has also submitted its full and final bill to the Bank. The Bank has accepted the completion of the work done by the assessee and has also accepted the bills received by it some time in March 1990. Since both the contracting parties agreed to the completion and execution of the job, as also to treat the bills as full and final, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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