TaxTMI 
TaxTMI 
2021 (6) TMI 509
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.... Rs. 5,57,448/- disclosed that the TDS has been made on an aggregate amount of contractual payments of Rs. 2,78,72,229/-. Thus there was a difference of Rs. 1,12,72,068/- between the contractual amount shown in the TDS certificates and that shown in the Profit and Loss account. Hence the A.O. asked the assessee to explain the difference between the turnovers. The assessee submitted that it has received an advance amount of Rs. 74,32,104/- and the same was not included in the turnover. According to the AO, the assessee did not furnish any documentary evidence in support of this claim. 3. Since the assessee has claimed credit for entire TDS amount of Rs. 5,57,448/-, the AO took the view that the assessee should have disclosed gross receipts of Rs. 2,78,72,229/- shown in the TDS certificates as its turnover. Accordingly, he assessed the difference of Rs. 1,12,72,608/- as income of the assessee. The Ld. CIT(A) also concurred with the view taken by the A.O. and hence, the assessee has filed this appeal before us. 4. The Ld. A.R. has filed his written submissions and also advanced his arguments. He submitted that the assessee, being a civil contractor, would raise invoices on it....
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....ancial statements uploaded by the Appellant on 29.09.2018 show that the appellant has offered revenue/income from contracts as under: Note 13 Work Contract & Supplies 71,69,238 VAT collected 10,39,541 Works Contract Services 73,60,951 Service Tax Collected 10,29,891 1,65,99,621 Note 15 Increase in Contract Work in progress ____________ (Note 15) 1,00,02,270 Amount offered as income 2,66,01,891 Note 4(b) Increase in Advance received from customers (Note 4b) 74,32,104 Closing balance 17,01,238 Less: Opening Balance 57,30,866 Total of "Amount Credited/ Paid" reflected in financial Statements. 3,23,32,757 It appears the A.O. is not conversant with Financial Statements of a Contractor and due to "E-Proceedings" was restricted from being enlightened by the A.R. of the appellant on the nature of operations and book keeping of a contractor, particularly the 'concept of cash and mercantile system of accounting'. As the A.O. has not rejected the accounts under section 145, present action is not as per law. The Ld reiterated the s....
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.... crores is liable to be assessee during the year under consideration. The assessee is a civil contractor and hence it keeps on receiving advances from its clients. The assessee would be preparing running bills upon completion of agreed stage of construction. According to the accounting practice followed by the assessee, the invoice so raised and approved by the client, is recognized as contract receipts in the books of account. Hence there bound to be mismatch between the amount of contractual payments made by the client and the contract receipts accounted for by the assessee in the Profit and Loss account. 10. The assessee has claimed TDS amount of Rs. 5,57,448/- during the year under consideration. The details of the same along with corresponding "contractual payments" have been tabulate as under by the AO:- Sl. No. Name of the deductor TDS deducted TDS claimed in the current year Gross receipts (in Rs.) 1 Iconica Constructions 36,868 36,868 18,43,382 2 Prestige Estates Projects Ltd. 2,60,220 2,60,220 1,30,10,944 3 Safalaakar Buildtech 2,25,047 2,25,047 1,12,52,281 4 Skylark ArcadiaPvt. Ltd. 21,795 21,795 ....
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....the assessee in summary manner, the assessee has claimed that there is increase in "work-in-progress" amount to the tune of Rs. 2,66,01,891/- and it is further stated that the above said WIP has been offered as income by the assessee. We are unable to agree with the said submission. The amount of "work in progress" cannot be considered as an item of income offered by the assessee. We explain the same. The amount of "Closing stock"/work in progress" is credited to the Profit and Loss account under "revenue cost matching principle", i.e., in order to arrive at the correct profit, one is entitled to deduct only corresponding cost. In the normal practice, the purchases made during the year would be booked in the Purchases account and the entire amount shall be transferred to the Profit and Loss account. This kind of practice necessitates crediting of profit and loss account with Closing stock. We will explain this practice with a simple illustration. 14. For example, if a person has purchased 10,000 units at a cost of Rs. 50/- per unit, then the purchases account will show a balance of Rs. 5,00,000/- and the same shall be transferred to the Profit and loss account. If that per....
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....ed have been accounted for by the assessee, which will help the assessing officer to take proper view of the matter. 16. The Ld D.R submitted that the assessee shall be entitled to TDS credit of proportionate amount only, i.e., the amount proportionate to contractual receipts recognized as income. For example, the TDS amount deducted by M/s Iconica Constructions was Rs. 36,868/- against the payment of Rs. 18,43,382/-. We have noticed earlier that the assessee has offered a sum of Rs. 11,13,237/- only as its income and the balance amount of Rs. 7,30,145/- has been shown as advance. Hence, out of the TDS amount of Rs. 36,868/-, the assessee would get TDS credit proportionate to the amount of Rs. 11,13,237/- and the credit for balance amount of TDS would be given in the year in which the balance contract receipt of Rs. 7,30,145/- is offered as income. 17. The Ld D.R submitted that her submissions are in tune with the provisions of sec.199(3) r.w. rule 37BA of I T Rules. However, the Ld A.R has submitted that there are certain case laws, which have held that the entire amount of TDS credit should be given irrespective of disclosure of corresponding income. Accordingly he submitte....