AI Drafter 
TaxTMI 
TaxTMI 
2015 (12) TMI 183
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....5.1994 for first phase which was completed in May, 1999. Contract-II was entered into on 30.11.1998 for construction of 1444MW gas turbine power plant. Contract-II consisted of two contracts, namely, Construction Contract and Service Contract. The Onshore Construction Contract entered into between DPC and the assessee on 30.11.1998 did not run its full course. This contract was terminated by the assessee on 17.06.2001 on account of non-payment of bills by the DPC. Pursuant to termination of contract with DPC, the assessee raised a claim of USD 17.73 million (Rs. 85.99 crores) which comprises of following: Sr.No. Particulars Amount (in Rs) 1 For the contractual work performed till date of termination i.e. June 2001 26,47,94,234 2 For demobilization in winding up of site operations post termination of the contract 59,51,15,766 Total 85,99,10,000 Above bill amount was not credited to its profit and loss account for the year ending on 31-3-2002, on the plea that the ultimate collection of the said amount was not certain while raising the bill. The assessee also gave a note to the Computation of Income that the claim raised for various amoun....
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....:- Sr. No. Case Laws Citation 1 CIT v. Motor Credit Co. P. Ltd. [1981] (127 ITR 572) (mad) 2 SLP by the Department against the decision of Madras High Court in the case of CIT v. Motor Credit Co. P. Ltd reported in 127 ITR 572 (Mad) dismissed [1983] (144 ITR (St) 50) 3 CIT v. Ferozepur Finance (P) Ltd. [1980] (124 ITR 619) (P&H) 4 SLP by the Department against the decision of P&H High Court in the case of CIT v. Ferozpur Finance (P) Ltd reported in 124 ITR 619 (P&H) dismissed [1983] (144 ITR (St) 50) 5 CIT v. Vasisth Chay Vyapar [2011] (330 ITR 440) (Del.) 6 D.R.D. Tata v. ITO [1986] (17 ITD 0642) (Bom.) 7 Malbros Investment Ltd. v. DCIT [2008] (11 DTR 314) (Del.) 8 ITO v. Dyestuffs & Chemicals (P) Ltd. [1983] (6 ITD 513) (Bom.) 9 FGP Ltd. v. CIT (applying Supreme Court judgment in case of Godhara Electricity 225 ITR 746 [2010] (326 ITR 444) (Bom) 10 CIT v. Orissa State Financial Corporation [1993] (201 ITR 595) (Ori.) 11 UCO Bank vs. CIT [2014] (43 taxmann.com 294) (Cal HC) 12 Maruti Securities Ltd. vs. ACIT ITA No. 468/Hyd/2009 13 CIT vs. Excel Industries Ltd....
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....liberated on the judicial pronouncements referred by lower authorities in their respective order as well as cited by ld. AR and DR during the course of hearing before us. From the record we found that the assessee was awarded two contracts by DPC. The DPC contract was in two phases. Contract-I was completed on May 1999 whereas Contract - Il, comprising of Construction and Service Contract did not run in its full course and was terminated by the assessee on 17 June 2001 on account of non-payment of bills by DPC. DPC was a company based in India, formed to manage and- operate Dabhol Power Plant. Enron was the major shareholders of DPC. Enron had entered into Memorandum of Understanding ('MOU') with the government of the state of Maharashtra for the project which was followed by execution of Power purchase agreement ('PPA') for 20 years with Maharashtra State Electricity Board ('MSEB'). The terms of PPA included guarantee by MSEB to buy 90% of electricity produced, annual payment of USD 220 million to DPC. Subsequently Enron, the major shareholder went bankrupt and filed for bankruptcy in December 2001. Further due to ongoing dispute with MSEB, the MSEB stopped....
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....f the said amount was not certain while raising the claim. Precarious financial position of DPC resulted in continuous defaults in payments to assessee. The assessee terminated the contract due to non payment of claims and on a realistic/prudent basis did not make any entry for the improbable contract revenue in its profit and loss account. As regards claim of Rs. 59.51 crores the invoices in respect of the same were raised in November 2001 which is 5 months after the termination of contract. The said invoices was in respect of sub-clause (ii) and iii) of Clause 44.2 of the agreement which refers to the amount of expenditure which the assessee incurs in expectation of the performance of contract or in consequence of termination of Contract and loss of anticipated profit on account of termination of contract. The CIT(A) has held that the invoices in relation to the same were never accepted by DPC and that consequently the said amount never accrued to the assessee. The fact of nonacceptance of the invoices has not been disputed by the department. In the given circumstance CIT(A) has rightly held that since the assessee had no right to receive the said amount, the said amount had not ....