TMI Blog2013 (7) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... did not get any right to receive the sum which could have been retained in pursuance of the contract - One has to look at the contract and not at the entries made in the books of account - by no stretch of imagination it can be said that the said amount had accrued by way of income to the assessee in the previous year in question. As decided in C.I.T. v. Simplex Concrete Piles (India) Pvt. Ltd., (1988 (12) TMI 52 - CALCUTTA High Court) (Cal.) it was held that case that when there is a clause with regard to retention money, the assessee gets no right to claim any part of the retention money till the verification of satisfactory execution of the contract is concluded and, therefore, if there is no immediate right to receive the retentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities was withheld towards retention money. It was contended that the assessee had no right on such retention money till completion of the work and submission of mechanical certificate. Such amount was, therefore, not considered as income while computing the assessees total income. The same would be recognized only on satisfaction of the terms of the contract. 4. Assessing Officer, however, did not accept the assessees stand and while framing the assessment held that such amount represented assessees accrued income. 5. Against such order of assessment, assessee carried the issue in appeal before CIT(Appeals). CIT(Appeals) deleted the addition upon which the Revenue approached the Tribunal. The Tribunal in the impugned order referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk guarantee which is clear from para 15 of that decision which reads as under: In our opinion, it accrued to the assessee and retained by way or additional security and in fact received by the assessee by furnishing a bank guarantee 9. In the instant case there is no dispute about the fact that assessee has received any money out of the amount retained as retention money by the contractee. These are some of the distinguishing features between the case of the assessee and DCIT vs. Amarshiv Construction (P) Ltd. (supra) case. Therefore, we have no hesitation in holding that reliance placed by the A.O, on the decision in the case of DCIT vs. Amarshiv Construction (P) Ltd. (supra) was misplaced. 10. In view of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity to disburse or pay. However, in both cases, unless there is real income, there cannot be any income tax. In the instant case also, there is no real income so far as Rs. 3 lacs are concerned because no debt has been created in favour of the assessee by virtue of clause No. 14 of the contract and as the assessee did not get any right to receive the said amount during the previous year in question, it cannot be said that income in respect of the amount in question had been accrued to the assessee during the previous year in question. Looking to the facts of the present case and in the light of the law laid down by the Hon'ble Supreme Court in the cases referred to hereinabove, it is very clear that unless and until a debt is crea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had accrued to the assessee. We can test the above conclusion in a different manner too. Whether Godrej was liable to pay Rs. 4 lacs to the assessee in spite of the fact that quality of the plant was admittedly not up to the mark? Did the assessee get a vested right to get the said amount? Answer to these questions would be in negative and, therefore, as observed hereinabove, it cannot be said that income had accrued to the assessee. A similar question had arisen in case of C.I.T. v. Simplex Concrete Piles (India) Pvt. Ltd., 179 ITR 8, (Cal.). Having regard to the facts and circumstances of the case, it was held in that case that, when there is a clause with regard to retention money, the assessee gets no right to claim any part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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