2015 (4) TMI 1344 - AT - Income Tax

Tribunal Upholds Deletion of Retention Money Addition, Remands Issue to Assessing Officer

The Tribunal upheld the deletion of the addition of retention money, citing past precedents and Tribunal orders in the assessee's favor. The issue was ... Accrual of income - Addition retention money - assessee contended that the right to receive the retention money was not accrued to the assessee and hence the same was not shown in its income during the year under consideration - HELD THAT:- As complete facts of the case were not examined and verified including the amount if any incurred by the assessee for business purpose out of the retention amount. However, after passing of the impugned orders, there is a change on the matter in issue and the points have now been decided in favour of the assessee which is also not disputed by the learned DR. However, the authorities below have no occasion to examine the facts of the case in the light of the above decisions cited by the learned Counsel for the assessee. Both the parties agreed that the matter may be remanded to the file of the AO for reconsideration of the issue in the light of the decision delivered by the Hon'ble Punjab & Haryana High Court [2009 (11) TMI 995 - PUNJAB AND HARYANA HIGH COURT] and the Hon'ble Supreme Court (2009 (5) TMI 16 - SUPREME COURT]. We find force in the submissions of both the parties that the matter requires reconsideration in the light of the above decisions. We accordingly, set aside the orders of the authorities below and restore this issue to the file of the AO for reconsideration of the same in the light of the above decisions cited by the learned Counsel for the assessee. AO shall also verify the details filed by the assessee on this issue and shall pass reasoned order in accordance with law by giving reasonable sufficient opportunity of being heard to the assessee. In the result, these grounds of appeal of the assessee are allowed for statistical purposes. Issues:Appeal against deletion of addition of retention money.Analysis:The Revenue appealed against the deletion of an addition of Rs.99,99,041 made on account of retention money by the Commissioner of Income-Tax (Appeals). The Assessing Officer (A.O.) observed that the assessee had excluded the retention money from profits, but the assessee argued that the right to receive the money had not accrued during the year. The A.O. contended that under the Mercantile System of accounting, the money should be accrued as soon as entries are made in the books. However, the CIT(A) deleted the addition, citing past decisions in favor of the assessee in similar cases.The CIT(A) referred to previous appellate orders in favor of the assessee in different assessment years, which led to the deletion of the addition. Both parties agreed that the issue was in favor of the assessee based on Tribunal orders in the assessee's case for different years. The Tribunal decided to restore the issue back to the A.O. for reconsideration in line with the directions given in a previous case. Following the Tribunal's orders in the assessee's case, the issue was sent back to the A.O. for further review. Consequently, the appeal of the Revenue was allowed for statistical purposes.In conclusion, the Tribunal upheld the decision to delete the addition of retention money, based on past precedents and Tribunal orders in the assessee's case. The issue was remanded back to the Assessing Officer for further consideration in line with the Tribunal's directions in a previous case. The appeal of the Revenue was allowed for statistical purposes, and the decision was pronounced in court on a specified date.