2006 (8) TMI 135 - HC - Income Tax

Accural Of Income - whether the retention money could be considered to be the income of the assessee in the year in which the amount was retained. - held that the payment of retention money in the case of contract is deferred and is contingent on satisfactory completion of contract work. The right to receive the retention money is accrued only after the obligations under the contract are fulfilled and, therefore, it would not amount to an income of the assessee in the year in which the amount is retained revenue appeal is dismissed

Summary

The High Court of Bombay dismissed the appeal regarding whether retention money can be considered as income in the year it is retained. Citing judgments from Calcutta and Madras High Courts, it was concluded that retention money does not accrue to the assessee and hence is not liable as income in that year. The appeal was dismissed.