2019 (7) TMI 1512 - AT - Income Tax

Rectification of mistake - retention money assessment - HELD THAT - There were two appeals filed by the assessee for the same Assessment Year 2007-08, which were arising out of separate proceedings. A mistake crept into the order of the Tribunal as the Ground No. 3.2. was not disposed off. The ITAT has wrongly recorded that the assessee has not challenged this issue of the ld. CIT(A) adopting the net profit rate on the retention amount in question as income, though the assessee had taken a specific ground against this issue. Hence this mistake which is apparent on record has to be rectified. Accrual of income - retention money exclusion or inclusion from income - HELD THAT - As following the binding judgment of the Hon ble Jurisdictional High Court in the case of CIT vs. Simplex Concrete Piles (India) Limited 1988 (12) TMI 52 - CALCUTTA HIGH COURT the act of the ld. CIT(A) in restricting the exclusion of the retention money has to be held as contrary to the judgment of the Hon ble Jurisdictional High Court. order of the ITAT is hereby rectified stating CIT(A) was wrong in bringing to tax part of the retention money in question. Hence these grounds of the assessee are allowed and the addition on account of retention money is hereby deleted in full.

Summary

Issues:
1. Rectification of mistake apparent on record regarding taxability of retention money.
2. Disposal of ground not addressed in the Tribunal's order.
3. Compliance with the binding judgment of the Jurisdictional High Court.

Issue 1:
The assessee contended that a mistake apparent on record existed in the Tribunal's order concerning the application of the net profit rate on the taxability of retention money. The assessee argued that based on the decision of the Jurisdictional High Court, the entire retention money should be excluded from income as it did not accrue to the assessee. The ld. D/R agreed that a mistake had occurred in the order and pointed out that the specific ground raised by the assessee had not been disposed of. The Tribunal acknowledged the mistake and rectified it by allowing the assessee's appeal and deleting the addition on account of retention money in full.

Issue 2:
The Tribunal noted that there were two appeals filed by the assessee for the same Assessment Year, and a mistake had crept into the order as a particular ground was not disposed of. The Tribunal rectified this error by allowing the ground raised by the assessee regarding the exclusion of retention money that did not accrue during the previous year. The Tribunal held that the ld. CIT(A) had erred in not allowing the exclusion of the entire retention money and in adopting a method unsupported by law. The Tribunal referred to the binding judgment of the Jurisdictional High Court to support its decision to allow the assessee's appeal.

Issue 3:
The Tribunal emphasized the importance of complying with the binding judgment of the Jurisdictional High Court in the case of CIT vs. Simplex Concrete Piles (India) Ltd. The Tribunal held that the ld. CIT(A)'s action of restricting the exclusion of retention money was contrary to the High Court's judgment and, therefore, allowed the grounds of the assessee's appeal related to this issue. The Tribunal rectified the order to reflect the correct position in line with the binding judgment, thereby deleting the addition on account of retention money in full.

In conclusion, the Tribunal rectified the mistake apparent on record, disposed of the ground not addressed in the initial order, and ensured compliance with the binding judgment of the Jurisdictional High Court, ultimately favoring the assessee's appeal and deleting the addition on account of retention money.