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TMI Blog2019 (7) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... ny interest is not a prudent business practice. 3. The Ld.CIT(A) ought to have appreciated the fact that when the assessee claimed for credit for TDS made by the contractee and the same was allowed, the corresponding receipts are chargeable to tax as per the provisions of Sec. 199 of the I.T.Act. 4. Alternatively, the Ld.CIT(A) ought to have held that the difference amount retained with the assessee without returning to the contractor would be treated as income of the assessee under the head "Income from Other Sources". 5 Any other ground that may be urged at the time of appeal hearing." 3. All grounds of appeal are ralated to the addition made by the Assessing Officer (AO) amounting to Rs. 6,40,70,427/- which was partly confirmed by the ld. CIT(A). 4. Facts of the case, in brief, are that the assessee is in the business of contract works by supply of labour. For the year under consideration, the assessee filed her return of income declaring total income of Rs. 71,84,370/- on 15/11/2013. The case was selected for scrutiny and in the course of assessment proceedings, the Assessing Officer has observed that the assessee has admitted the gross contract receipts of Rs. 34,89,17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the work order, the company has to pay the amounts to the assessee as per the work done by the assessee. The maintenance of hostels and college campus is a continuous work which was required to be executed by the assessee to the company. Therefore, the Assessing Officer did not believe the unilateral cancellation of agreement in the absence of any evidence, hence, made the addition of Rs. 6,40,70,427/- representing the difference between the receipts to be received as per the contract agreement and the receipts admitted as per the profit & loss account. The receipts as per the contract agreement worked out to Rs. 41,29,88,248/- whereas the contract receipts admitted by the assessee was Rs. 34,89,17,821/-, which resulted in difference of Rs. 6,40,70,427/- and the same was added by the Assessing Officer in the assessment . 5. Aggrieved by the order of the Assessing Officer, the assessee went on appeal before the CIT(A).Before the ld. CIT(A), the assessee filed reconciliation of contract receipts. The ld. CIT(A) had observed that M/s. Varsity Education Management Pvt. Ltd. has confirmed the refund of advance given to the assessee and from the bank account, it was seen that a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be taxed as income. Hence, submitted that the Assessing Officer rightly made the addition and requested to set aside the order of the ld. CIT(A) and confirm the entire addition. 8. On the other hand, ld.AR submitted that the assessee had received an amount of Rs. 6.13 crores from the company, however, the agreement was cancelled due to differences and the assessee had to refund the entire amount, accordingly the assessee had refunded the amount through RTGS which is evidence by the bank account. The assessee also furnished copy of bank account reflecting the repayment of Rs. 6.07 crores through RTGS on 25/02/2013 through Axis Bank. At page No.5 of the paper book the assessee enclosed the copy of letter issued by M/s. Varsity Education Management Pvt. Ltd., confirming the cancellation of the agreement and receipt of the sum of Rs. 6.07 crores, therefore, argued that the assessee did not render any service and due to cancellation of the agreement, the assessee has to refund the entire amount, hence, requested to the delete the addition made by the Assessing Officer and uphold the order of the ld. CIT(A). 9. We have heard both the parties and perused the material placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 15 days." 10.1. The terms of termination of contract is available in clause 9 of the contract as under:- "9.0 Notwithstanding clause 2, the company shall be entitled to withdraw this work order with immediate effect and without any compensation or damages due to the contractor, but without prejudice to any other rights or remedies the company may have, if the contractor: I. Commits a serious breach of the terms of this Work Order which the Contractor fails to rectify within 14 days of receipt of written notice from the Company, specifying the breach and requesting specific remedy; II. Persistently neglects, fails or refuses to perform to the satisfaction of the Company the services which are to be provided under this Work Order; III. Becomes unfit to perform the services under this Work Order or is incapable of performing them adequately for a consecutive period of one month; IV Has a receiving order made against him or their properties, or makes any arrangement with his creditors." 10.2. As per clause 2 of the work order, it is deemed to be commenced on 01/04/2012 and shall continue until 30/06/2012, initially for a period of 3 months and renewable with mutual consen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment received from M/S Varsity Education was income or only the advance amount. During the appeal hearing also the Ld.A.R did not furnish the details such as the date of cancellation, reasons for cancellation, whether work order has been executed till the date of cancellation, the charges received, the compensation payable in case of unilateral cancellation etc. Therefore, we are of the considered view that the issue is required thorough examination with the books of account of the assessee as well as the company. Therefore, we remit the matter back to the file of the Assessing Officer with a direction to re-examine the issue in detail and decide the issue afresh on merits. Hence the issue is set aside for denovo consideration. The assessee is directed to furnish the required information for completion of assessment and it is needless to say that the Assessing Officer must give reasonable opportunity to the assessee. Since we remit the matter back to the file of the Assessing Officer, we consider it is not necessary to adjudicate the ground Nos. 3 & 4. Thus, the appeal filed by the Revenue is allowed for statistical purpose. 13. So far as cross objection filed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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