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TMI Blog2024 (1) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... element of income i.e. to be offered to tax with regard to the claim of the assessee that the credit for TDS should be given to the assessee. As per table submitted by the ld AR that the mobilisation advance is recovered against the billed revenue in the subsequent years. We further notice that the assessee has offered income on gross basis and that the TDS is deducted on the net amount paid which would mean that the advance amount is not treated as revenue that goes to reduce the billed revenue. Therefore in our consider view the CIT(A)'s contention that the amount adjusted goes to reduced the income of the assessee and accordingly is in nature of income is not correct. This fact is identical to the facts in Patel Engineering [ 2015 (11) TMI 1665 - ITAT MUMBAI] where the coordinate bench has directed the AO to allow credit for the TDS deducted on the advance. Thua assessee should be allowed credit for the TDS claimed which is deducted from the mobilization advance. Appeal of assessee allowed. - SHRI PAVAN KUMAR GADALE, JM MS PADMAVATHY S, AM For the Appellant : Shri Anuj Kisnadwala M.M. Lalvani, CA For the Respondent : Shri Joginder Singh, Sr. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has been considered, however, the same is not acceptable. Mobilisation advance is nothing but activation of a contractor's physical and manpower resources for transfer to a constructions site till the completion of the contract, in civil construction projects advance is given to the contractor which is known is as Mobilization Advance. It is normally 15% of the total contract value. The prerequisite for the issue of advance is that contractor has to provide a guarantee in the shape of Bank or Insurance equal to the amount being issued to the contractor. Mobilization advance is deducted from the bills of contractor in equal instalments covering the project period on completion of recovery Guarantee provided by the contractor is released. As per section 194C - tax is deductible at the time of credit or payment whichever is earlier, and the mobilization advance is paid as per the terms conditions of the contract the same falls under the contractual obligation and the TDS provisions u/s 194C are applicable and in the assessee's case, the TDS has duly been deducted by the Road Transport Division of the Ministry of Road Transport and Highways. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the head Other liabilities (page 25 of PB) and also interest paid on the mobilization advance is debited the P L A/c (page 27 of PB). The ld AR also submitted the below table to substantiate that the advance/loan has been fully recovered against the subsequent contract payments and that the billed revenue is offered to tax on gross basis to submit that the advance / loan is a capital receipt. 6. The ld. AR further submitted that the contention of the revenue is that the refund cannot be granted since the corresponding income has not been offered to tax in order to give credit for the TDS and that it would in violation of the provisions of section 199 r.w.r. 37A. The ld. AR further argued that the provisions of section 199 r.w.r. 37A need to be interpreted liberally and in assessee's case the receipt being capital in nature cannot be offered to tax and that cannot be the reason for denial of TDS credit. The ld. AR submitted that the Co- ordinate Bench of the Tribunal in the case of Patel Engineering Ltd. V/s ACIT (ITA No. 6605/M/2013 dated 18.11.2015) has considered a similar issue and directed the AO to given credit for the TDS. The ld. AR also placed reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract agreement, it is clear that the mobilization advance is in the nature of loan which bears interest @ 10% p.a. and the interest along with the advance payment should be recovered from the assessee. It is also noticed that the said advance is extended to the assessee against the bank guarantee given @ 110% of the amount of advance given. Therefore, we see merit in the contention that the amount received by the assessee is a capital receipt and does not bear the element of income i.e. to be offered to tax with regard to the claim of the assessee that the credit for TDS should be given to the assessee. We noticed that the Co-ordinate Bench in the case of Patel Engineering (supra) has considered a similar issue and held that 32. We have considered rival contentions and found that in terms of the contract agreement, the assessee receives advances/loans on which the payer deducts tax at source. Such loans and advances can broadly be classified as (i) Site Mobilisation loan granted to enable the assessee to mobilise the work site i.e. create access roads, mobilise men, equipments, establish and set up site office, etc., (ii) Machinery Mobilisation loan granted to enable the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst work and material, we found that the said advance is reflected as a reduction from construction work in progress, which itself is valued at contract rates i.e. selling price. In other words, the income pertaining to such advance is already impregnated in the work in progress offered for tax during the impugned year itself. The Tribunal in ACIT v Patel KNR Joint Venture ITA 5230/Mum/2012, on identical facts, following Toyo Engineering Ltd., decided in favour of the assessee. Respectfully following the decision of the coordinate bench in the case of associate concern of the assessee vis- -vis other decisions referred above, we direct the AO to allow the credit for TDS in year of deduction itself. We direct accordingly. 11. We also noticed that the similar view has been held by the Co-ordinate Bench in the sister concern of the assessee Transonnelstory Afcons Joint Ventures V/s ACIT (supra). 12. During the course of hearing the ld. AR brought to our attention that in the case of assessee's sister concern Transonnelstory Afcons Joint Ventures V/s ACIT for AY 2011-12 a similar issue was contended and since the CIT(A) did not consider the issue on merits for the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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