2012 (5) TMI 369

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..... t of closing stock? 2. Whether the Tribunal is right in law in ignoring that the role of the assessee with regard to the goods supplied by supplier is only that of a bailee and so the value of goods cannot constitute income in its hands? 2. Learned counsel appearing for the assessee submits that he is not pressing the second substantial question of law. An endorsement to that effect has also been made by the learned counsel appearing for the assessee. Hence, the question that survives for consideration herein is the first substantial question of law. 3. The assessment year under consideration is 1987-88. The assessee herein had an agreement with Naval Science and Technological Laboratory (NSTL) for the execution of work under an agreemen .....

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..... ly progress payments pro-rata according to the quantities of work billed for, to the extent of 75% of the cost of cement and 100% of the cost of steel. Clause 5.08 states that the progress payment made shall be regarded as payment by way of advance against final payment only and not as payment for the work completed till the date of progress payment. Clause 24.01 of the contract further provides that the contractor assessee herein had to arrange for all the materials required for the contract work, including steel and cement. Clause 24.02 states that on request from the contractor assessee, the owner might assist the contractor in procuring steel and cement and giving the contractor the necessary priority and essentiality certificates. Irre .....

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..... el supplied by NSTL. In the circumstances, there could be no separate addition. Thus, the addition of a sum of Rs.55,72,981/- was cancelled. 7. The Revenue filed an appeal before the Tribunal as against this portion of the order, which, however, accepted the Revenue's contention and allowed the appeal. The Tribunal pointed out that when the assessee had undertaken only labour contract, the assessee should not have debited the cost of material to its account. Thus, without showing corresponding earnings, the cost of the material, per se, could not be claimed by the assessee in the accounts. In the circumstances, agreeing with the contention of the Revenue, the Tribunal allowed the Revenue's appeal, thereby restored the assessment. Aggrieved .....

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