TaxTMI 
TaxTMI 
2013 (10) TMI 1366
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.... Act"), for the assessment years 2003-04, 2006-07, 2007-08 & 2008-09. 3. The appellant is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of execution of construction contracts. In respect of some of the contracts executed, a clause in the contract entitles the customers to retain a certain contract value ranging between 5% to 10% till the completion of defect liability period specified in the contract, which generally ranges 12 to 24 months post-completion of construction. The plea of the assessee is that the income on account of such retention money withheld by the contractees/customers does not accrue to the assessee in the year in which the amount is retained and that the taxability of such amount is to be considered in the year in which such amounts are actually received by the assessee from the contractees/customers. 4. There was a search and seizure action u/s 132(1) of the Act conducted in the case of the assessee on 18.12.2008 and as a consequence notices u/s 153A(a) of the Act were issued to the assessee for the captioned assessment years. In the assessments finalized u/s 153A r.w.s. 143(3) of the Act, Assessing Offi....
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....iod of six assessment years referred to therein, which are pending on the date of initiation of the search u/s 132 of the Act, shall abate. The scope of assessment or reassessment of the six assessment years immediately preceding the assessment year relevant to the year in which the search is conducted, has been explained by the Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd. (supra). According to the Special Bench, in so far as the abated assessments are concerned, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A of the Act. In other words, according to the Special Bench of the Tribunal, in the pending assessments which abate on account of the second proviso to sec4tio n 153A(1) of the Act, the Assessing Officer is empowered to assess not only the income assessable under the normal provisions of the Act but also additions which are required to be made on the basis of the search and seizure action u/s 132(1) of the Act. In contrast, in respect of assessments of the years which do not abate because of the same having been concluded and not pending on the date of search are concerned, in addition to....
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....lso. 10. In the above undisputed fact situation, now we may examine the scope of assessments to be made u/s 153A(1)(b) of the Act for the assessment years 2007-08 and 2008-09, which have abated and for the assessment years 2003-04 and 2006-07, which do not abate. Following the reasoning laid down in the case of All Cargo Global Logistics Ltd. (supra) , it has to be held that in so far as the assessment years 2003-04 and 2006-07 are concerned, assessments u/s 153A(1)(b) of the Act would be made on the basis of incriminating material, which has been explained to mean (i) books of account, other documents, found in the course of search but not produced in the course of original assessment; and, (ii) undisclosed income or property discovered in the course of search. Of course, the income so determined shall be in addition to the income already assessed in regular assessment proceedings for the said two assessment years. Now, the moot point is as to whether the impugned claim of the assessee for excluding income on account of retention money can fall in the scope and an ambit of an assessment made u/s 153A(1)(b) of the I.T Act for the assessment years 2003-04 and 2006-07. Ostensibly, a....
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....sing Officer retains his original jurisdiction as well in the assessments for the years 2007-08 and 2008-09 to be made u/s 153A(1)(b) of the Act, in our considered opinion, as the following discussion would so, such a claim though made for the first time in the impugned assessment proceeding, would fall within the ambit and scope of impugned assessment carried out u/s 153A(1)(b) of the Act. Pertinently, the original jurisdiction vested with the Assessing Officer for the assessment years 2007- 08 and 2008-09 empowers him to consider the impugned claim; and, to put it in other words, assessee was competent to raise such a fresh claim in the context of the original jurisdiction vested with the Assessing Officer, though it was not raised in the returns of income originally filed. 13. We may also consider this from another angle. As on the date of initiation of search i.e. 18-12-2008, the returns of income filed by assessee u/s 139(1) of the Act for assessment years 2007-08 and 2008-09 were pending for assessment and the impugned claimed was not made in the returns of income originally filed. So, however, u/s 139(5) of the Act, assessee was competent to furnish a revised return and mak....
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....ed the relevant clauses permitting retention of a portion of the contract value. It is pointed out that strictly speaking the judgement of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) is not applicable in the present case as no fresh claim was made in the assessment proceedings, but it is a case where a claim put-forth in the return of income was only quantified during assessment proceedings and thus the Assessing Officer ought to have entertained the impugned claim. Alternatively, it is contended that the CIT(A) enjoys plenary powers of the Assessing Officer, and following the judgment of the Hon'ble Supreme C9 ourt in the case of Jute Corporation of India Ltd. vs. CIT, (1991) 187 ITR 688, the claim should have been entertained by him as the complete facts were on record. In this context, the learned counsel referred to the decision of the Pune Bench of the Tribunal in the case of Jain Irrigation Systems Ltd. vide ITA No.1319/PN/2009 dated 30.01.2012 wherein the import of the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) has been explained on the basis of the judgment of the Hon'ble Delhi High Court in the case of CIT vs. ....
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....er the completion of the construction. Inadvertently in the original return filed this amount was not excluded while computing the total income. In the short span of time allowed to us to file the return u/s. 153A, the exact quantification of the retention money could not be worked out. Hence we will submit the details thereof later. But for the time being, we submit that the retention money in the various contracts is not taxable in view of the various decisions including the decisions cited below wherein it is held that the taxability of this amount is to be considered in the year in which this amount is due to the assessee from the contractee. (a) CIT v Associated Cables P. Ltd. (2006) 286 ITR 596 (Bom.) (b) DCIT v Spirax Marshall Ltd. (2007) 109 TTJ (Pune) 593 ( c) National Heavy Engg. Co. Op. Ltd. v DCIT (2007) 105 ITD 485 (Pune) Inadvertently, in the Original Return of Income this amount was not claimed as deduction. We request Your Honour to kindly grant us appropriate deduction while completing assessment. We shall submit the necessary details and quantification of claim during the course of assessment." 20. The aforesaid Note clearly depicts the claim of the assessee ....
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....foresaid light, we find no justification for the Revenue to reject assessee's impugned claim for assessment years 2007-08 and 2008-09 on the ground that the claim was made by way of a letter during the course of assessments and not in the return of income. 23. The third objection which has be1e2n raised by the Revenue is in terms of a discussion made by the CIT(A) in para 3.6 of the impugned order. According to the CIT(A), if the claim for excluding retention money was entertained and allowed, it would result in the determination of total income at a figure below the income originally returned/assessed and thus the same was not permissible. This objection of the Revenue, in our view is no bar to entertain the aforesaid claim, keeping in mind the ratio of the judgement of the Hon'ble Supreme Court in the case of CIT vs. Shelly Products & Anr., (2003) 261 ITR 367 (SC) and also the judgement of the Hon'ble Gujarat High Court in the case of Gujarat Gas Co. Ltd. vs. CIT, 245 ITR 54 (Guj). 24. On the basis of the aforesaid discussion, in conclusion we hold that in so far as the assessment years 2007-08 and 2008-09 are concerned, the claim of the assessee for exclusion of income on acco....