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“retention money”

ICDS & AccountingICDS IIIICDS III115 judgments

The decision most relied on for retention money is CIT v. Simplex Concrete Piles (India) P. Ltd. (179 ITR 8), cited in 36 judgments on BharatTax.

Leading authorities on retention money

CIT v. Simplex Concrete Piles (India) P. Ltd.
179 ITR 8 · 1989 · High Court
36
citing judgments

Retention money does not accrue to an assessee until the defect liability period is over and it is certified that no liability is attached to the assessee, at which point the assessee acquires the right to receive such money.

296 (Mumbai-Trib). PNC Construction Co Ltd. v. DCIT
92 Taxmann.com 106 · 2018 · Reported
28
citing judgments

Where an assessee enters into a development contract where it undertakes all acts from project design to handing over, it is considered to be developing a facility as a whole, not performing a specific work. This implies the ownership of the site is not transferred.

CIT v. Associated Cables P. Ltd.
286 ITR 596 · 2006 · High Court
25
citing judgments

Retention money withheld by a contractee is not taxable in the year it is retained, but only in the year the obligations under the contract are fulfilled and the amount becomes due to the assessee.

CIT v. Ignifluid Boilers (I) Ltd.
283 ITR 295 · 2006 · High Court
19
citing judgments

Retention money is considered deferred payment and is not taxable in the year it is retained if it is contingent upon the satisfactory completion of the contract work and the assessee has no vested right to receive it.

292 ITR 399, 252 ITR 802, CIT v. East Coast Constructions and Industries Limited
283 ITR 297 · 2006 · High Court
13
citing judgments

Retention money, withheld by a contractee until the completion of a contract, does not accrue to the assessee and is therefore not taxable in the year it is retained, even if the assessee follows the mercantile system of accounting.

Judgments citing retention money

Celestial Avenues Pvt Ltd Rep. by Csk Properties Pvt Ltd on Merger-PAN-Aadcc3990R, Hyderabad vs. Asst. Commissioner of Income Tax, Circle -1(2), Hyderabad

In the result, all the appeals of the assessee are allowed

ITA 212/HYD/2024[2017-18]Status: HeardITAT Hyderabad01 Jan 2025AY 2017-18

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha G, Hon’Bleआ.अपी.सं / Ita Nos.212 To 214/Hyd/2019 (निर्धारण वर्ा / Assessment Years: 2006-07, 2007-08 & 2008-09) M/S. Sabir, Sew & The Deputy Commissioner Of Prasad, Jv, Vs. Income Tax, Hyderabad. Circle – 6(1), Hyderabad. Pan : Abcfs2425A अपीलार्थी / Appellant प्रत्‍यर्थी / Respondent

For Appellant: Shri A. Srinivas, C.AFor Respondent: Shri Srinath Sadanala, Sr.DR
Section 132Section 143(2)Section 143(3)Section 153CSection 801ASection 801A(4)Section 80I

SABIR, SEW & PRASAD JV developer. In contrast, the present assessee bears substantial entrepreneurial and financial risks, including performance guarantees, liquidated damages, and retention money, assuming the obligations and risks typically associated with a developer. The decisions in M.S. Khurana Engineering Ltd. and NEC NCC Maytas JV are not applicable ... highlighted that the assessee bore significant financial and operational risks, including providing performance guarantees, facing potential liquidated damages for delays, and being liable for retention money. These elements evidenced the assessee's entrepreneurial risk, a hallmark of developer activities under Section 80IA. The CIT(A) referenced the legislative history