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TMI Blog2022 (8) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... 49/Kol/2017 for the assessment year 2014- 15. The revenue has raised the following substantial questions of law for consideration: i) Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal erred in holding that the retention money of Rs.142.53 crores did not arise in the relevant assessment year 2014-15 when the entire amount of Rs.142.53 crores was credited by the Principal Contractors and TDS was deducted and paid by those parties and also claimed by the assessee ? ii) Whether on the facts and circumstances of the case and in law, the learned Tribunal has failed to adjudicate the question raised by the Revenue in Appeal that by such crediting of income by contractors and TDS Deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It was further contended that the finding of the assessing officer that the assessee was following mercantile system of accounting, yet the retention money for the contract completed during the year was to be included in the total income as per the provision of Section 194C of the Act when the said provision has nothing to do with the accrual of income in the hands of the recipients when the assessee under the law was not entitled to claim payment until fulfilment of the terms of contract and expiry of the period for which the retention money was withheld and, as such, under the mercantile system of accounting, the said amount did not accrue to the assessee. Before the CIT(A), a sample contract entered into between the assessee and the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year in question. As the order delivered by the Jurisdictional bench of ITAT Kolkata in the case of Mcnally Bharat Ltd (supra) and the Hon'ble Calcutta High Court in the case of Simplex Concrete (Piles) India Pvt. Ltd. (supra) are very much applicable in this case, therefore, respectfully following the ratio decided in the above mentioned cases, retention money has to be excluded from the income. The assessee's appeal on grounds no. 2, 3 and 4 are to be allowed. However, the TDS claimed by the assessee relatable to such retention money is to be disallowed in the assessment year in question. It may be allowed in the year in which the assessee declares retention money as its income. Accordingly, assessee's appeal on grounds no.2, 3 and 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the factual circumstances especially as per the terms of contract between the assessee and the contractee, the retention money retained by the contractee is deferred payment and is contingent upon satisfactory completion of contract work. We hold that the right to receive the retention money is accrued only after the obligations under the contract are fulfilled and the assessee had no vested right to receive the same in this assessment year, therefore, it would not amount to an income of the assessee in the year in which it is retained. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and so, we confirm it and dismiss the appeal of the Revenue". From the above finding, we have no hesitation to hold that the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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