Retention money accrues only on enforceable receipt rights; prior identical Tribunal rulings bind absent factual distinction.

Retention money under a construction contract was held to accrue only when the contractor acquired an enforceable right to receive it after satisfaction of defect-liability conditions, not merely on bill certification or retention by the payer. The Tribunal also applied consistency in the assessee's own case, holding that its earlier decision on bills receivable and work-in-progress for identical facts bound the later Bench in the absence of any material distinction. It further held that each assessment year is a separate unit, so findings cannot be made for years not actually in appeal, though consequential effects may follow in accordance with law.

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Issues: (i) whether retention money under construction contracts accrued to the assessee in the year of retention or only in the year of actual receipt after clearance of defect liability claims; (ii) whether the earlier Tribunal decision in the assessee's own case on bills receivable and work-in-progress bound the Bench for the years under appeal; (iii) whether the Tribunal could issue findings or consequential directions for assessment years not before it.

Issue (i): Whether retention money under construction contracts accrued to the assessee in the year of retention or only in the year of actual receipt after clearance of defect liability claims.

Analysis: Retention money was withheld under the contract towards defect liability and, on the facts, the contractor had no enforceable right to receive it until the contractual conditions were satisfied. Under mercantile accounting, income accrues only when the right to receive arises, and the mere raising or passing of bills does not by itself create accrual of the retained amount. The material also showed that the terms of release depended on completion of the defect liability period and certification of rectification, so the timing of accrual had to follow satisfaction of those conditions.

Conclusion: Retention money was held to accrue only on receipt after the contractual conditions were fulfilled, not in the year of retention.

Issue (ii): Whether the earlier Tribunal decision in the assessee's own case on bills receivable and work-in-progress bound the Bench for the years under appeal.

Analysis: The Third Member accepted that the same Bench, dealing with the assessee's own case on identical facts, had already decided the treatment of bills receivable and work-in-progress for the earlier year, and that consistency required the later Bench to follow that view. On the material placed, no distinguishing factual change was shown to justify departure from the earlier decision.

Conclusion: The earlier Tribunal decision on bills receivable and work-in-progress was held to have binding effect for the years under appeal.

Issue (iii): Whether the Tribunal could issue findings or consequential directions for assessment years not before it.

Analysis: The Third Member held that each assessment year is a separate unit of assessment and that the Tribunal's jurisdiction must remain confined to the years actually in appeal. Findings for years not before the Tribunal could not be adjudicated as substantive determinations in the appeal, though consequential effects may arise in accordance with law.

Conclusion: The Tribunal was held not to have power to decide issues for assessment years not before it.

Final Conclusion: The majority view accepted the assessee's position on the referred questions, with the result that the Revenue's appeals did not survive and stood dismissed.

Ratio Decidendi: Income from retention money under a construction contract accrues only when the contractual right to receive the retained amount arises, and the Tribunal must follow its own prior decision on identical facts unless a material distinction is shown, while remaining confined to the assessment years actually before it.

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