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TMI Blog2011 (11) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and execution of works on contract basis. The contracts that the petitioner enters into with various parties carry a defect liability clause usually for a period of one year of the completion of the work. It is the case of the petitioner that in the meantime, the petitioner receives interim payments from the contractee, which payments are made after deducting the retention money from the estimated value of the work completed. It is also the case of the petitioner that payment of retention money withheld by the contractee is, upon satisfactory completion of the work and expiry of the defect liability period is released. It is, therefore, the case of the petitioner that the right to receive the retention money does not accrue in the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d return on 17/11/2006 showing total income at Rs.28,73,365/-. The assessment u/s.143(3) was finalized on 21/11/2008,determining total income at Rs.36,12,630/-. It is seen that, Scrutiny of records revealed that as per schedule-B (Significant accounting policies and notes on accounts), "Contracts receipts are accounted (net of scrutiny deposits/Retention money)". Further as per letter dated 20-11-2008 assessee company as deducted Retention money of Rs.41,53,281/- from the profit of the company during the year. The Retention money was to be offered for taxation in the year in which bills are raised. Thus by deducing Retention money irregularly from the current year profit resulted in underassessment of income of Rs.41,53,281/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of view of the retention money and any other method would give a distorted picture. It was only thereafter that the Assessing Officer made certain additions but did not interfere with this method of accounting adopted by the petitioner. In short, the contention of the petitioner's counsel was that the issue was discussed threadbare by the Assessing Officer, while framing the original assessment. Now to reconsider the issue would only amount to change of opinion. 8. Counsel further submitted that at the hands of the assessee, the assessment order originally framed is in appeal before Commissioner (Appeals). On the principle of merger, it now would not be open for the Assessing Officer to reopen the assessment on this issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his is so because in our opinion the entire issue on merits has been decided in favour of the assessee right upto the High Court level. 12. We have briefly noted the central controversy on the basis of which the Assessing Officer seeks to reopen the assessment. The assessee, while executing the works contracts, raises its bills, receives periodical payments from the clients, which payment are made after retaining the part of the bills raised towards retention money. This is pursuant to the agreement between the parties that the retention money would be released upon expiry of a certain period after completion of the work. As per the assessee, though the bills are raised, right to receive such retention money is not accrued and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. The Assessing Officer did not accept assessee's claim holding that since the assessee was following mercantile system of accounting the accrual of income was independent of its receipt. In appeal before the Commissioner, the assessee contended that this uniform pattern has been followed year after year and in all previous years, the stand of the assessee has been accepted. The Appellate Commissioner deleted the addition relying on the decision of the Tribunal. Revenue had carried the order of CIT(Appeals) before the Tribunal. The Tribunal by its judgment dated 27.6.2008 dismissed the Revenue's appeal. Such decision of the Tribunal was carried further in appeal before this Court in Tax Appeal No.163 of 2009, which was dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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