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2016 (1) TMI 720 - ITAT MUMBAI

2016 (1) TMI 720 - ITAT MUMBAI - [2016] 46 ITR (Trib) 132 - TDS Credit - Accrual of income against advance received - method of accounting - project completion of method - Postponement of income received as remuneration for profession/technical services rendered - whether claim of the TDS was liable to be disallowed - it was submitted that when the assessee has not offered the corresponding tax in the year under consideration, then the claim of the TDS was liable to be disallowed.

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ee was justified to follow the project completion method of accounting. On the completion of the project, the amount quantified as the remuneration of the assessee was offered by the assessee for taxation and the same was accordingly claimed as expenditure by the builder. Till the completion of the project, the amount was not claimed by the builder as expenditure.

The Ld. CIT(A) has also taken into consideration the accounting method in relation to different projects and it was found .....

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actual remuneration was to be quantified at the completion of the project. The assessee therefore was justified in not offering the said amount as income for the year. He therefore upheld the additions so made by the AO. We do not find any infirmity in the above well reasoned order of the Ld. CIT(A) and the same is accordingly upheld - Decided in favour of assessee. - ITA Nos. 7579 & 8813/M/2011, 844 & 4921/M/2012 - Dated:- 18-12-2015 - N. K. Billaiya, AM And Sanjay Garg, JM For the Appellant : .....

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der. 2. The only issue involved in all the four appeals is regarding the postponement of income received as remuneration for profession/technical services rendered. For the sake of convenience, the facts have been taken from ITA No.7579/M/2011 for the A.Y. 2006-07. 3. The Revenue, in this appeal, has taken the following grounds: "1. On the facts and the circumstances of the case as well as in law, the Ld. CIT(A) erred in deleting the addition made by the A.O., the receipt as an income and a .....

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advance, without appreciating the fact that the payment received by the assessee is in the form of professional fees covered u/s. 194J of the I.T. Act, the assessee is acting as a consultant and getting the fees for work. 3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing officer be restored. 4. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 4. The facts in brief of the case are th .....

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counts, the AO noted that the assessee had not shown any such income by way of professional fees. On being asked to explain, the assessee submitted that there was an MOU between assessee and M/s. A.A. Estate Pvt. Ltd. which has been engaged in the business of real estate developer. As per MOU, assessee was to be paid 20% of the profit from the project and in case of loss, assessee has to bear 20% of loss. Further, as per MOU, the assessee was to be paid fixed remuneration of ₹ 2 lakh per m .....

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s payable to the assessee would be determined on the basis of profit or loss on the project and accordingly the assessee would be either eligible for 20% of the profit or would have to bear 20% of the loss. The amount of professional fees paid as advance would be accordingly adjusted. It was explained that accordingly the income or loss was being offered in the year of completion of various projects for which the assessee had rendered professional services as per the terms of the MOU. The AO, ho .....

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e of the nature of professional/technical services, however, as per MOU, the quantification of the actual amount payable to the assessee was possible only at the stage of completion of project. He, therefore, held that the amount received by the assessee during the year, though subjected to TDS, was only an advance which was adjusted on the completion of the project. He, therefore, deleted the additions so made by the AO. Being aggrieved by the order of the Ld. CIT(A), the Revenue has come in ap .....

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, it should not have adopted project completion method. As per the terms of the MOU, the assessee had to do various services/work which was much more than the work of consultancy and therefore it seemed that the M/s. A.A. Estate Pvt. Ltd. was only the financer of the project and the whole of the responsibility for execution of project was of the assessee company and that the MOU was a sham transaction. Without prejudice to the above, the Ld. D.R. submitted that when the assessee has not offered .....

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sis of completed project method and the profit or loss has been determined on the completion of each project. It may be noted that the expenses incurred by the assessee were not claimed as losses of each year have been capitalised to WIP and profit/loss is determined at the end of the completion of Project. It may further be noted that if there is a loss then the loss is to be borne by the assessee. he has further submitted that the project completion method is followed not only by the assessee .....

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ter verification of the records it has been pointed out that the amount received by the assessee was including the expenditure incurred by the assessee which was paid by M/s. A.A. Estate Pvt. Ltd. The amount paid to the assessee has not been claimed by the M/s. A.A. Estate Pvt. Ltd. as expenditure but has only been shown as work in progress. So there was a consistency in the accounts of both the payer and the payee. The services rendered by the assessee were also relating to the activities of th .....

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