TaxTMI 
TaxTMI 
2012 (12) TMI 66
X X X X Extracts X X X X
X X X X Extracts X X X X
.... circumstances of the case and in law, the CIT (A) has erred in deleting the addition of Rs.14,29,256/- on account of terms of Section 41 (1) of the IT Act." 2. Briefly, the fats are that the assessee company is in the business of construction activities. It has declared income of Rs. 32,41,870/- from the said business. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has received mobilization advances to the extent of Rs. 37,29,738/- from M/s Matrix Buildwell Private Limited. Even TDS has been deducted on these receipts. As the assessee did not disclose these receipts as his income for the year under consideration, he required the assessee to justify and explain the said receipt. The assessee fu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ruction at specific site/project. Mobilisation payments are payments of funds to a supplier or contractor before in anticipation of and for the purpose of performance under the contract in connection with the Structure. Since these payments are not measured by contract performance, they differ from partial payments which are based on actual performance of tasks in furtherance of the contract. Advance payment may, for example, be advisable to cover the initial mobilization expenses for large civil works or custom made goods. Any advance payments are to be liquidated from payments made to the supplier or contractor during performance of the contract, usually by deducting a percentage from each scheduled payment for performance. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aised by the assessee which are subject to adjustment in the final bill that would be issued by the assessee contractor to the builder M/s Matrix Buildwell Private Limited, after the completion of the project. Since the gross amount of running bills has taken part of the assessee's income, the mobilization advance amount so received as advance cannot be treated as income of the assessee. 5. The Ld. CIT (A), after considering the entire details as were laid before the Assessing Officer during the course of assessment proceedings and also those as were called for by virtue of the powers vested in him, found that the letter of intent itself stipulates that the mobilization advance shall be recovered from running bills on prorata basis subjec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....DR contends that the Ld. CIT (A) has erred in setting aside the addition as the amount of mobilization advance outstanding at Rs. 37,29,738/- is not an amount of advance only but a contract receipt liable for taxation as income in the year under consideration on which tax at source was also been deducted. It is further stated that before the Tribunal, the assessee has laid copy of mobilization amount at paper book page 8 which does not tally with the copy of this account produced before the assessing authority and this fact is verifiable from the assessment record produced before the Tribunal. He, therefore, requested to ignore this document for coming to the conclusion in accordance with the law. 7. On the other hand,, the assessee's coun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng account in which the assessee has received payments in advance towards contracts and raised debits for the certified work by raising running bills. We have also perused the running bill laid at the assessee's paper book at page 38. This bill reveals that the assessee has adjusted an amount of Rs. 2,00,146/- out of mobilization advance amount and the balance of the running bill amount has been routed through the running account of the builder client. The amount received as mobilization advance is not towards a contract receipt, but is merely an advance for mobilizing resources by the assessee for carrying out the work of its customer/client. This amount is required to be adjusted proportionately against the running bills for the work cert....