2006 (1) TMI 77

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....case, the Tribunal was right in holding that moneys retained by the contractee, as a percentage of the bills raised to be paid after the contract is completed is to be treated as income only when the moneys are actually received, even though the appellant is following mercantile system of accounting?" The facts leading to the above question of law are as under: The relevant assessment years are 1997-98 and 1998-99 and the 3 accounting years ended on March 31, 1997 and March 31, 1998, respectively. The assessee is a company, carrying on business of construction in various places. The assessee filed a return of income. It appears that 10 per cent, of the contract amount is retained by the parties as retention money and would pay it afte....

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....ived, should be treated as income for the period when it had been billed. Learned counsel for the respondent submitted that such money will be realised only when the customer is satisfied about the completion of the work entrusted to the appellant. The assessee had treated the amount as a contingent amount receivable and offered the same only on receipt basis. We heard the arguments of learned counsel. 10 per cent, of the retention money was withheld by the parties on the ground that the amount would be realised only after completion of the contract. The said amount is payable after completion of the contract. The said retention money accrues to the assessee only after the completion of the contract. The said amount is payable to the ass....