TMI Blog2012 (12) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... ork certified. The amount of mobilization account that has been adjusted during the year under consideration has been included as assessee’s income whereas the balance outstanding remains as a current liability for the year. The same is liable to be adjusted against the future running bills in the subsequent year. Essential this receipt was not in the nature of income. Merely because tax at source has been deducted by the builder, the receipt of mobilization money cannot be deemed as income of the assessee for the year under consideration - no error in the decision reached by CIT (A) in deleting the addition on this count - no merit in this ground raised by the revenue, the same stands rejected. Treatment of Outstanding liability as Ceas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Briefly, the fats are that the assessee company is in the business of construction activities. It has declared income of Rs. 32,41,870/- from the said business. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has received mobilization advances to the extent of Rs. 37,29,738/- from M/s Matrix Buildwell Private Limited. Even TDS has been deducted on these receipts. As the assessee did not disclose these receipts as his income for the year under consideration, he required the assessee to justify and explain the said receipt. The assessee furnished written submissions which were duly considered. The Assessing Officer, thereafter, being not satisfied with the explanation of the assessee, proceede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of performance under the contract in connection with the Structure. Since these payments are not measured by contract performance, they differ from partial payments which are based on actual performance of tasks in furtherance of the contract. Advance payment may, for example, be advisable to cover the initial mobilization expenses for large civil works or custom made goods. Any advance payments are to be liquidated from payments made to the supplier or contractor during performance of the contract, usually by deducting a percentage from each scheduled payment for performance. The basic purpose of Mobilisation advance which is initially released against Bank Guarantee is to extend financial assistance within the terms of contract to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Private Limited, after the completion of the project. Since the gross amount of running bills has taken part of the assessee s income, the mobilization advance amount so received as advance cannot be treated as income of the assessee. 5. The Ld. CIT (A), after considering the entire details as were laid before the Assessing Officer during the course of assessment proceedings and also those as were called for by virtue of the powers vested in him, found that the letter of intent itself stipulates that the mobilization advance shall be recovered from running bills on prorata basis subject to adjustment in pre final bill for complete recovery. The total contract value was for Rs. 5,24,56,297/- and 7 % thereof as mobilization advance co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of advance only but a contract receipt liable for taxation as income in the year under consideration on which tax at source was also been deducted. It is further stated that before the Tribunal, the assessee has laid copy of mobilization amount at paper book page 8 which does not tally with the copy of this account produced before the assessing authority and this fact is verifiable from the assessment record produced before the Tribunal. He, therefore, requested to ignore this document for coming to the conclusion in accordance with the law. 7. On the other hand,, the assessee s counsel relying on the order of the Ld. CIT (A) contents that there is no material difference in the copy of account as laid before the Appellate Tribunal and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so perused the running bill laid at the assessee s paper book at page 38. This bill reveals that the assessee has adjusted an amount of Rs. 2,00,146/- out of mobilization advance amount and the balance of the running bill amount has been routed through the running account of the builder client. The amount received as mobilization advance is not towards a contract receipt, but is merely an advance for mobilizing resources by the assessee for carrying out the work of its customer/client. This amount is required to be adjusted proportionately against the running bills for the work certified. The amount of mobilization account that has been adjusted during the year under consideration has been included as assessee s income whereas the balance o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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