TaxTMI 
TaxTMI 
2013 (7) TMI 421
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....the Appellate Tribunal has substantially erred in holding that the ratio of decision in the case of Amarshiv Construction Pvt. Ltd (88 ITD 381) would not be applicable in the instant case 2. Short issue is whether a sum of Rs.6.24 crores (rounded off), which represented retention money for fulfillment of the contract by the assessee should be treated as accrued income. 3. For the Assessment Year 2002-03 the assessee, during the course of assessment, pointed out that said sum of Rs.6.24 crores should not be considered as income of the assessee being retention money relating to the satisfactory execution of the contract. It was pointed out that in terms of the contract between the assessee and the companies awarding the contracts to the ass....
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.... DCIT vs. Amarshiv Construction (P) Ltd. (supra) decision which reads as under:- ''In all these three cases, the Supreme Court held that there was no real income and, therefore, not eligible to income-tax whereas in the present case, it is nobodys case that no income has resulted at all. The question is only as to in which year it accrued to the assessee. According to the Revenue, it was in the year when the bills were presented and passed for payment and the assessee received the money by furnishing bank guarantee and as per the assessee it was the year after the performance liability clause was over and the bank guarantee were released and ceased to be operative. ....
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....r supply and erection of plant specified that full amount would not be paid if the plant was defective. The assessee had debited the sum of Rs. 3 lakhs by crediting the same to the warranty account as some dispute had arisen with respect to the execution of the contract. In such background, the Court considered whether such amount represented assessees accrued income. In this context, it was held and observed as under: ''For the purpose of ascertaining whether income had, in fact, accrued, one has to also see whether there is a real income. It has been also observed by the Hon'ble Supreme Court in C.I.T. v. Bokaro Steel Ltd.,236 ITR 315, that no matter by adopting what method the assessee maintains his accounts, it....
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....ntract. One has to look at the contract and not at the entries made in the books of account. If, upon construction of the contract, one comes to a conclusion that the assessee could not have received Rs. 4 lacs from Godrej, by no stretch of imagination it can be said that the said amount had accrued by way of income to the assessee in the previous year in question. As the plant was not up to the satisfaction of Godrej, Gorej had a right to retain Rs. 4 lacs. It is not in dispute that during the previous year in question the dispute as to quality of the plant had arisen and the assessee had also felt that quality of the plant was not up to the mark and, therefore, believing that Godrej might ultimately retain Rs.3 lacs or under the warranty ....