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Income Tax Appellate Tribunal, “C” BENCH, PUNE
Before: SHRI R.S.SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM:
This appeal preferred by the Revenue emanates from the order of the Ld. CIT(Appeal), Pune-1 dated 22.06.2017 for the assessment year 2014-15 as per the following grounds of appeal :
“1. The Ld. Commissioner of Income-tax (Appeals) has erred in his jurisdiction while directing the AO to consider the claim of assessee pertaining to retention money of Rs.4,90,24,344/- from the total income.
2. The Ld. Commissioner of Income-tax (Appeals) has erred in his jurisdiction while adjudicating and directing such action to AO as per para 16 of his order when this issue was not at all deliberated by AO in the assessment order.
3. The Ld. Commissioner of Income-tax (Appeals) further erred in assuming the jurisdiction by setting aside the assessment order when he doesn't have such power u/s.250 r.w.s. 251 r.w.s. 246 of I.T. Act, 1961. 4. The Ld. Commissioner of Income-tax (Appeals) also erred in his action for granting such claim of deduction to assessee without admitting any new evidence on record as per Rule 46A of I.T. Rules r.w.s. 250. Further direction of CIT(A) to AO for reconsideration by AO is without jurisdictional and also without any support of law. 5. The Ld. Commissioner of Income-tax (Appeals) also erred in his action in relying on decision of ITAT, Pune and Bombay High Court as referred in Para.16 of his order when no such situation has been dealt by AO in the assessment order. Therefore deriving strength from judicial pronouncement of Bombay High Court was not a justified action in eyes of law. In view of the same, order of CIT(A) may be vacated. 6. The appellant craves leave to add, amend, alter or delete any of the above ground of appeal during the course of appellate proceedings before the Hon’ble Tribunal.”
At the very outset, the Ld. DR for the Revenue submitted that this is a matter on recall by virtue of the order of Miscellaneous Application No.22/PUN/2021 dated 05.03.2021 by the Revenue.
The only issue for adjudication in this appeal is whether retention money of Rs.4,90,24,344/- was not taxable in view of decision of the Hon’ble Bombay High Court while computing the assessed total income.
The brief facts in this case are that during assessment proceedings, it was submitted by the assessee vide letter dated 28.11.2016 at Para B that retention money which is kept by customers does not amount an income in the year in which such amount is retained by the customers. The assessee relied on the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Associated Cables (P). Ltd. (2006) 286 ITR 596 and the decision of the Pune Bench of the Tribunal in the case of Akruti Projects, order dated 10th January, 2014. However, the Assessing Officer while passing assessment order has neither considered the submissions of the assessee nor judicial pronouncements and held the retention money as taxable and added to the total income of the assessee.
That before the Ld. CIT(Appeal), it was submitted by the assessee that in assessment year 2013-14, the Ld. CIT(Appeal) had directed the Assessing Officer to consider the claim for exclusion from total income for such retention money and also that the Assessing Officer shall be entitled to verify the quantum of amount before allowing such relief. Thereafter, the assessee had submitted a statement showing details of retention money kept by customers on the invoices generated in the current year along with ledger extracts to show that customers had retained certain sums as retention money. This retention money withheld by contractees pending satisfactory completion of the project does not amount to an income in the year in such amount is retained by customers in-principle. That once again, the assessee relied on the aforesaid judicial pronouncements (supra.) which are on record. On this issue, the Ld. CIT(Appeal) has held as follows:
“16. I have carefully considered the facts of the case as well as reply of the appellant. In this case, it is seen that the appellant made claim of retention money of Rs.4,90,24,344/- being not taxable during the course of assessment proceedings, as there was no time for filing of revised return of income. The appellant claimed before the AO that the above amount is not taxable in view of Hon. Bombay High Court’s decision in the case of CIT Vs. Universal Cables Pvt. Ltd. (2006) 286 ITR 596 and Hon Pune Tribunal’s decision in the case of Akruti Projects, dated 10/01/2014. The AO could not have accepted the claim of the appellant in view of Hon. Supreme Court’s decision in the case of Goetz India Ltd. 284 ITR 323 (SC). However, he should have dealt with the issue specifying the reasons for rejecting the said claim. However, restrictions put in the case of Goetz India Ltd. (supra.) are not applicable to appellate authorities as held by Hon. Bombay High Court in the case of Pruthvi Brokers and Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.). Relying upon the above decision, it is held that the above claim can be examined at the CIT(A) level. Coming to the merit of the issue, it is seen that the issue has been decided by Hon. Pune Tribunal in the case of Akruti Projects (supra.) as under:
“In such like situation, as per the Hon'ble High Court in the case of Associated Cables (P) Ltd. (supra) the retention money withheld by the contractees pending satisfactory completion of the project would not amount to an income in the year in which such amount is retained by the customers. In-principle, in our view, the claim of the assessee is in accordance with the parity of reasoning laid down by the Hon'ble High Court in the case of Associated Cables (P) Ltd. (supra). So however, since the aforesaid is a new claim raised before us which has not been put to verification by the lower authorities, we therefore deem it fit and proper to restore the matter back to the file of the Assessing Officer who shall verify the claim of the assessee and thereafter allow the same in accordance with law. Needless to say, the Assessing Officer shall allow the assessee a reasonable opportunity of being heard in the matter and only thereafter the Assessing Officer shall pass an order afresh as per law.
Before parting, we may observe that the additional Ground is being admitted only with respect to a claim of Rs.25,02,710/- and no more. In other words, even if the amount excludible from income on account of it being in the nature of retention money following the parity of reasoning the Hon'ble High Court in the case of Associated Cables (P) Ltd. (supra) is in excess of Rs.25,02,710/-, the claim of the assessee shall be limited to Rs.25,02,710/- and if it is below the said amount, then only the appropriate relief shall be allowable.
Thereafter, relying on the decision of the Pune Bench of the Tribunal in the case of Akruti Projects (supra.), the Ld. CIT(Appeal) directed the Assessing Officer to consider the claim of Rs.4,90,24,344/- of the assessee for exclusion from total income subject to verification of the quantum of amount before allowing such relief.
These facts were conceded by the Ld. DR for the Revenue. He submitted that from assessment year 2016-17, this retention money is taxable. However, we find that the case before us pertains to assessment year 2014-15 and during this time, retention money was not taxable. We find, in the facts and circumstances, judicial pronouncements relied on by the assesse are on the point. The Ld.CIT(Appeal) has also relied on such judicial pronouncements and directed the Assessing Officer to exclude the retention money as claimed by the assessee subject to verification of the total quantum.
Therefore, we do not find any reason to interfere with the findings of the Ld. CIT(Appeal) and relief provided to the assessee is accordingly, sustained.
In the result, appeal of the Revenue is dismissed.
Order pronounced on 11th day of October, 2021. Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; ददनांक / Dated : 11th October, 2021. SB आदेश की प्रधतधलधप अग्रेधषत / Copy of the Order forwarded to : अपीलाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT (Appeal), Pune-
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