2022 (2) TMI 1197 - AT - Income Tax

Addition on account of retention money - matter has not been verified whether or not the retention money has been offered in subsequent years - CIT-A deleted the addition - HELD THAT - We find that CIT(A) while granting relief to the assessee specifically mentioned that Assessing Officer himself has not addition any addition on account of retention money in order giving effect in all cases vide his order dated 19.11.2016. Despite accepting the contention of the assessee in all earlier in his own order on 19.12.2016, filed present appeal on similar issue on 20.12.2019. Before us Ld. Sr.DR for the Revenue vehemently argued and insisted that principle of consistency should have been followed by ld CIT(A) and now the issue be restored to the file of AO. We are unable to persuade ourselves on the submission of Ld. Sr.DR for the revenue, as the AO himself deleted the similar addition by accepting the contention of assessee on the retention money and again filed the appeal on the same issue. Therefore, we do not find any infirmity in the order passed by Ld. CIT(A). Accordingly, we affirm the same. - Decided against revenue.

Summary

Issues:
Appeal against deletion of addition on account of retention money for assessment year 2011-12.

Analysis:
1. The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) concerning the deletion of an addition of ?1,85,24,060 on account of retention money for the assessment year 2011-12. The Revenue contended that the matter of whether the retention money had been offered in subsequent years was not verified by the Commissioner of Income Tax (Appeals).

2. The case involved an assessee company engaged in manufacturing industrial plant and alcohol-based chemical plants. The Assessing Officer found that the company had reduced ?1.85 crores from its sales as retention money retained by customers. The company explained that the retention money was held by customers until the plant's satisfactory performance, and it was released after a specified guarantee period. The Assessing Officer added back the retention money to the total income of the assessee, stating that the full amount had been received in a subsequent year.

3. The Commissioner of Income Tax (Appeals) considered the submissions of the assessee and referred to previous judicial decisions in the assessee's favor for assessment years 2002-03, 2005-06, 2008-09, and 2010-11. The Commissioner found no justification to sustain the addition for the year under consideration, as no addition was made in the previous years regarding retention money. The Revenue appealed this decision before the Tribunal.

4. The Tribunal heard arguments from both parties and reviewed the orders of the authorities below. It noted that in previous years, the Assessing Officer had not made any addition on account of retention money, as accepted by the Commissioner of Income Tax (Appeals). Despite the Revenue's argument for consistency, the Tribunal found no infirmity in the Commissioner's decision and affirmed the deletion of the addition on retention money.

5. The Tribunal dismissed the appeal of the Revenue, upholding the decision of the Commissioner of Income Tax (Appeals) regarding the deletion of the addition on account of retention money for the assessment year 2011-12. The order was pronounced in the open court on 23/02/2022.