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TMI Blog2019 (3) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 (hereinafter the 'Act'), relating to Assessment Years 2007-08, 2008-09 & 2009-10. 2. As the issues arising in all these appeals are common, for the sake of convenience they are heard together and disposed off by way of this common order. 3. We have heard Shri Pankaj Parekh, FCA, the ld. Counsel for the assessee and Shri A.K. Nayak, CIT D/R on behalf of the revenue. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 4. The first common issue that arises for consideration in all these appeals is the rejection by the revenue of the claim of the assessee that retention money is not income of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork - Held, yes" 5. The decision of the ITAT Mumbai 'H' Bench of the Tribunal in the case of Emerson Network Power India (P.) Ltd. v. Assistant Commissioner of Income-tax [2009] 27 SOT 593 (MUM.) relied upon by the ld. D/R is not applicable to the facts of the case, for the reason that, what was considered by the Bench was performance bank guarantee and not retention money as in the case of the assessee company. Even otherwise, we are bound by the judgment of the Hon'ble Jurisdictional High Court in the case of Commissioner of Income-Tax vs Simplex Concrete Piles (India) Pvt. Ltd. 5.1. We also find that the reliance placed by the ld. D/R on the judgement in the case of E.D. Sassoon & Co. Ltd. v. Commissioner of Income-tax [1954] 26 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions such as verification of satisfactory execution of the contract involved. But the A.O.'s case also has merit in the sense that AS prescribes booking loss immediately on such realization by the appellant. Excluding the whole of the retention money from the profit figure brings in distortion in the profit in the sense that the profit equal to the retention money is pot offered to tax but postponed to a later year. The whole idea of AS-7 is to correlate the profit to the period of work. This is an improvement over the project completion method which results in distorted profit results where the profit of the whole project gets aggregated in the last year when the long term project are completed. To remove this distortion AS-7 broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retention money is concerned that cannot be ignored. But reducing the whole of retention money from the profit thus results in the extreme distortion. In my view the above decisions have not factored in the matching principles which means that the income or revenue has associated costs and, therefore, the costs associated to or corresponding to the retention money has also to be considered to make it realistic. I, therefore, hold that the whole of retention money cannot be reduced from the revenue offered to tax. This also goes against the standards AS-7. The A.O. is directed to adjust the profit contained in the retention money which may be worked on the basis of average profit on the gross turnover of the appellant in absence of profitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. Hence the assessee should not have any grievance on the same. Regarding the finding of the ld. CIT(A), that net profit rate has to be applied, this issue is not challenged by the assessee in its grounds of appeal. The ld. Counsel for the assessee raised oral arguments on this issue without raising any specific ground. In the absence of any specific ground of appeal we cannot entertain these oral submissions. 8. The ld. Counsel for the assessee submits that he is not pressing all the other grounds raised by it in all the Assessment Years. Hence all the other grounds for all the three Assessment Years, are dismissed as not pressed. 9. In the result, appeal of the assessee is dismissed. Kolkata, the 15th day of March, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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