ISOLUX CORSAN INDIA- C & C JV,GURGAON vs. ITO, GURGAON

This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] -1, Gurgaon dated 22.02.2017 pertaining to assessment year 2012-13.

The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the denial of credit of TDS.

Notice issued to the assessee was returned unserved. We find that the notice was issued on the address given in Appeal Memo. Since no one appeared on behalf of the assessee, we decided to proceed exparte.

We have heard the ld. DR at length who heavily relied upon the assessment order and the order of the ld. CIT(A).

Briefly stated, the facts of the case are that the assessee is a joint venture between Isolux Corsan India Engineering and Construction Pvt. Ltd. and C&C Construction Ltd. for carrying out execution of construction contracts in the field of any kind of roads, building etc.

During the course of scrutiny assessment proceedings, the Assessing Officer sought explanation from the assessee to the difference in the revenue recognized in the Profit and Loss Account and receipts as per Form 26-AS. The assessee filed reconciliation of gross receipt as under:

In its reply, the assessee explained that it has made progressive invoicing to the tune of Rs. 71,40,75,685/- and received mobilization advance of Rs. 84,79,59,184/- during the year under consideration, which has not been considered as income for the year under consideration according to the Percentage of Completion Method [POCM] adopted by the assessee. It was brought to the notice of the Assessing Officer that the payers have deducted and deposited the applicable TDS on these progressive invoicing and advance payment and accordingly, the assessee has claimed TDS in the year under consideration.

The Assessing Officer dismissed the claim of the assessee holding that the credit of TDS is to be allowed only in the year in which receipt has been reflected by the assessee as its income in its account.

The assessee agitated the matter before the ld. CIT(A) but without any success.

We have carefully perused the orders of the authorities below.

We find that in its reply, the assessee has specifically mentioned that since it is following POCM, it has offered for tax the income on which it has claimed TDS during the year, in subsequent years on the basis of revenue recognized as per the consistent method of accounting followed by the assessee as per POCM.

We find that there is no mention of any such income offered in subsequent Assessment Years nor it has been verified by the Assessing Officer. Therefore, in the interest of justice and fair play, we restore this issue to the file of the Assessing Officer. The Assessing Officer is directed to verify whether the income has been recognized in subsequent Assessment Years and if found correct, credit of TDS should be given accordingly.

In the result, the appeal of the assessee in is treated as allowed for statistical purposes.