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TMI Blog2014 (12) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... to look at the contract and not at the entries made in the books of account - the Tribunal rightly upheld the order of the CIT(A) wherein it has been held that the retention of 10% money of total sales was due to specific terms and conditions for final payment mentioned in the customer purchase order - the assessee - company had been following this system of accounting for the last several years and was accepted by the department – the order of the Tribunal is upheld – Decided against revenue. Disallowance on interest and administrative expenses u/s 14A - onus to prove the nexus of interest free funds utilized for the purpose of making investments earning exempt income discharged or not – Held that:- The Tribunal has taken note of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-? [B]Whether the Appellate Tribunal is right in law and on facts in upholding the order of the CIT (A) to delete the disallowance u/s 14A of the Act ₹ 28,36,668/- on account of interest and administrative expenses when assessee had failed to discharge its onus to prove the nexus of interest free funds utilized for the purpose of making investments earning exempt income? 2. The assessment year is 2005-06 and the relevant accounting period is the financial year 2004-05. The Assessing Officer had made additions on the ground that the assessee was not accounting the money retained by the assessee s customer as per contractual obligation. Since it was following the mercantile system of accounting, the Assessing Officer rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted for during the current year. 4. This, court has considered the submissions advanced by the learned counsel for the appellant. It, however, is an admitted position that an identical question arose for consideration before this court in Tax Appeal No.144 of 2013, wherein, while dismissing the appeal the court held thus: 6. Having heard learned counsel for the Revenue and having perused the documents on record, we find that the issue under consideration is squarely covered by the decision of this Court in the case of Anup Engineering Ltd. Commissioner of Income-tax reported in 247 ITR 457. 7. In the said case the agreement that the assessee entered into for execution of a contract for supply and erection of plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the previous year in question. Looking to the facts of the present case and in the light of the law laid down by the Hon'ble Supreme Court in the cases referred to hereinabove, it is very clear that unless and until a debt is created in favour of the assessee, which is due by somebody, it cannot be said that the assessee has acquired a right to receive the income or that the income has accrued to him. A debt must have come into existence and the assessee must have acquired a right to receive the payment. In the instant case, the assessee did not get any right to receive a sum of ₹ 4 lacs which could have been retained by Godrej in pursuance of clause No. 14 of the contract. One has to look at the contract and not at the entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f C.I.T. v. Simplex Concrete Piles (India) Pvt. Ltd., 179 ITR 8, (Cal.). Having regard to the facts and circumstances of the case, it was held in that case that, when there is a clause with regard to retention money, the assessee gets no right to claim any part of the retention money till the verification of satisfactory execution of the contract is concluded and, therefore, if there is no immediate right to receive the retention money, the said amount cannot be said to have accrued to the assessee. Even in the instant case, so far as retention money is concerned, the assessee had not to receive the same and therefore it cannot be said that the amount of ₹ 3 lacs had accrued to the assessee. 8. In the result, this Tax Appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of this court. Under the circumstances, no question of law can be stated to arise as proposed. This ground of appeal is, therefore, dismissed. 7. Insofar as the second question which relates to addition of ₹ 28,36,668/- under section 14A of the Act on account of interest and administrative expenses is concerned, the Tribunal has taken note of the fact that the matter had initially been restored to the file of the Commissioner (Appeals) with a specific direction to bring out clearly as to whether the borrowed fund had indeed been utilized in investment in shares/mutual funds for earning exempt income. The Commissioner (Appeals), with a view to carry out this direction analyzed the financial chart showing the financial summ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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