[aaykarbhavan] retention money is not income

 

 

IT : Where assessee was awarded a contract and in terms of contract certain amount was withheld by contractee towards retention money for satisfactory execution of contract by assessee, retention money did not represent assessee's accrued income

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[2013] 33 taxmann.com 139 (Gujarat)

HIGH COURT OF GUJARAT

Director of Income-tax ( International Taxation)

v.

Ballast Nedam International*

AKIL KURESHI AND MS. SONIA GOKANI, JJ.

TAX APPEAL NO. 144 of 2013†

MARCH  28, 2013 

Section 5 of the Income-tax Act, 1961 - Income - Accrual of [Retention money] - Assessment year 2002-03 - One 'A' awarded a contract to assessee for construction of a project - In terms of contract executed between parties certain amount was withheld by 'A' towards retention money for satisfactory execution of contract - Assessee claimed that it had no right on such retention money till completion of work and submission of mechanical certificate and, therefore, it did not form part of its income - Assessing Officer held that retention money represented assessee's accrued income - Whether in view of decision of Gujarat High Court in case of Anup Engineering Ltd. v. CIT [2001] 247 ITR 457/114 Taxman 584 retention money could not be said to have accrued to assessee - Held, yes - Whether, therefore, aforesaid amount did not represent assessee's accrued income - Held, yes [Paras 6 & 7] [In favour of assessee]