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TMI Blog2019 (3) TMI 1645X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court in the case of Commissioner of Income-Tax vs Simplex Concrete Piles (India) Pvt. Ltd. [ 1988 (12) TMI 52 - CALCUTTA HIGH COURT] We also find that the reliance placed by the ld. D/R on the judgement in the case of E.D. Sassoon Co. Ltd. v. Commissioner of Income-tax [ 1954 (5) TMI 2 - SUPREME COURT] is also misplaced as the Hon ble Supreme Court was considering a case where the assessee had acquired the right to receive the income. In the case on hand, the assessee had no right to receive the income. We uphold the contention of the assessee and direct the AO to exclude the retention money included in the sales. This retention money can be brought to tax in the year when the assessee received the same. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Jindal Steel Power Ltd. 1,36,99,520/- 6,84,976/- 5 2. Hindalco Industries Ltd. 3,79,63,271/- 37,96,327/- 10 3. Tata Steel Ltd. LK 7 1,81,63,264/- 27,24,490/- 15 4. Tata Steel Ltd. -Yard Piping 1,29,22,442/- 19,38,366/- 15 5. Tata Steel Ltd. Struct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advanced lengthy arguments on the issue. On consideration of the facts and arguments we find that the issue is covered by the decision of the Hon ble Jurisdictional High Court in the case of Commissioner Of Income-Tax vs Simplex Concrete Piles (India) Pvt. Ltd. 1989 179 ITR 8 Cal, wherein it was held as follows:- Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessment years 1965-66 and 1966-67 - Assessee-company was carrying on construction business and followed mercantile system of accounting - As per terms of contracts entered into with various parties assessee was entitled to get 90 per cent of payment in first instance when work was done and remaining 10 or 5 per cent, as case may be, was to be paid later o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court was considering a case where the assessee had acquired the right to receive the income. In the case on hand, the assessee had no right to receive the income. 6. In view of the above discussion, we uphold the contention of the assessee and direct the Assessing Officer to exclude the retention money included in the sales. This retention money can be brought to tax in the year when the assessee received the same. Accordingly this ground of the assessee is allowed for all the Assessment Years. 7. In the assessee s appeal for the Assessment Year 2007-08, the order was passed u/s 143(3) of the Act, in pursuance of an order u/s 263 of the Act passed by the ld. Pr. CIT on 29/03/2012. The ld. CIT(A) partly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the concept of percentage completion method where the profit is distributed over the years on which the projects continue. The judicial decisions relied upon by the appellant cannot be completely ignored and has to be in fact followed. But in my view the said decisions have not considered the other aspects of computation of profit which is based on matching principles of accounting, according to which income and cost have to be matched to reach at the realistic profit. To exclude the retention money without considering the adjustment of associated costs is to bring in extreme distortion in the profit and results in a situation even worse than the project completion method which was superseded by the percentage completion method. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the specific contracts. 1.3. As per the appellant s submission dated 02.12.2009 the amounts of retention money are as under:- The net profit [PBT ₹ 6,06,48,881/-] in the current year is 4.88% of the turnover [₹ 124,23,63,983/-], which is less in percentage terms than the retention money [9.9 % of concerned sales]. The claim that the whole of retention money be taken to later years results in a situation where the profit from the associated contracts are not offered to tax even though the profit has been shown in the P L A/c. It may be noted that if retention money is excluded from the sales of associated contracts the profit computed as arising by excluding all the retention money results in loss of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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