“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

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

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

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

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

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

Diamond Concrete Structures Private Limited, Mumbai vs. ITO, 6(2)(1), Mumbai

ITA 653/MUM/2023[2015-16]Status: DisposedITAT Mumbai09 May 2023AY 2015-16

Section 143(3)Section 234BSection 271(1)(c)

facts have been wrongly interpreted by him. 3. The Ld AO erred in law and facts of the case by adding the retention money of Rs 37,60,671/-. 4. The Ld AO erred in charging interest u/s 234B and in initiating the penalty proceeding

Abhimanyu Sahu, Buxipalli vs. PCIT-1, Bhubaneswar

In the result, appeal filed by the assessee is allowed

ITA 30/CTK/2022[2016-17]Status: HeardITAT Cuttack24 Mar 2023AY 2016-17

Bench: Before S/Shri George Mathan, Judicial & Arun Khodpia & Arun Khodpia & Arun Khodpiaassessment Year : 2016-17 Abhimanyu Sahu, Buxipalli, Abhimanyu Sahu, Buxipalli, Vs. Pr. Cit-1, Gopalpur On Sea. Gopalpur On Sea. Bhubaneswar Bhubaneswar Pan/Gir No. Pan/Gir No.Aokps 4011 H (Appellant (Appellant) .. ( Respondent Respondent) Assessee By : Shri P.N.Dave, Ca P.N.Dave, Ca Revenue By : Shri M.K.Gautam, Pr. Cit (Osd) Pr. Cit (Osd) Date Of Hearing : 24 /0 03/2023 Date Of Pronouncement : 24 /0 /03/2023 O R D E R Per Bench This Is An Appeal Filed By The Assessee This Is An Appeal Filed By The Assessee Against The Order Against The Order Passed U/S 263 Of The Act 263 Of The Act Of The Ld Pr. Cit, Bhubaneswar-1 Dated Dated 10.3.2021 In Appeal No. Itba/Rev/ V/F/Rev5/2020-21/1031385941(1) For The Assessment Year For The Assessment Year 2016-17. 2. Shri P.N.Dave, Ld Ar Appeared For The Assessee & Shri Shri P.N.Dave, Ld Ar Appeared For The Assessee & Shri Shri P.N.Dave, Ld Ar Appeared For The Assessee & Shri M.K.Gautam, Ld Pr. Cit(Osd) Appeared For The Revenue. M.K.Gautam, Ld Pr. Cit(Osd) Appeared For The Revenue. M.K.Gautam, Ld Pr. Cit(Osd) Appeared For The Revenue.

For Appellant: Shri P.N.Dave, CAFor Respondent: Shri M.K.Gautam, Pr. CIT (OSD)

Section 143(3)Section 263

this view of the matter, I totally concur with the view of the Learned Judicial Member in respect of two issues viz. , accrual of retention money and bills receivable & work-in-progress. Thus, I decide the legal issue that the Bench should follow its earlier order, concurring with the learned

ACIT, Circle-1, Noida vs. Jaiprakash Associates Limited, Noida

In the result, appeals of the Revenue

ITA 947/DEL/2022[2012-13]Status: DisposedITAT Delhi07 Feb 2023AY 2012-13

Bench: Shri Anil Chaturvedi & Shri Anubhav Sharma

For Appellant: Shri Ashwani Kumar GargFor Respondent: Smt Abha Rani Singh

Section 143(3)

facts by deleting the additions of Rs 73,68,989/- made by the AO on account of Disallowance of Deduction on Account of Retention Money without appreciating the facts mentioned by the A0 in the assessment order. 5. That the CIT(Appeals) has erred in law and on facts ... Ground no. 4 is with respect to deleting the addition of Rs. 73,68,989/- on account of disallowance of deduction on account of retention money. 28. AO on perusing the computation of income noticed that assessee had claimed deduction of Rs. 73,68,989/- on account of retention money

ACIT, Circle-1, Noida vs. Jaiprakash Associates Limited, Noida

In the result, appeals of the Revenue

ITA 946/DEL/2022[2011-12]Status: DisposedITAT Delhi07 Feb 2023AY 2011-12

Bench: Shri Anil Chaturvedi & Shri Anubhav Sharma

For Appellant: Shri Ashwani Kumar GargFor Respondent: Smt Abha Rani Singh

Section 143(3)

ACIT, Circle-1, Noida vs. Jaiprakash Associates Limted, Noida

In the result, appeals of the Revenue

ITA 945/DEL/2022[2010-11]Status: DisposedITAT Delhi07 Feb 2023AY 2010-11

Bench: Shri Anil Chaturvedi & Shri Anubhav Sharma

For Appellant: Shri Ashwani Kumar GargFor Respondent: Smt Abha Rani Singh

Section 143(3)

Kendrapara Urban Co-Operative Bank Ltd., Kendrapada vs. Pr.Commissioner of Income Tax, Cuttack

In the result, appeal of the assessee stands allowed

ITA 163/CTK/2020[2015-16]Status: HeardITAT Cuttack30 Jan 2023AY 2015-16

Bench: Shri George Mathan & Shri Arun Khodpiaआयकर अऩीऱ सं/Ita No.163/Ctk/2020 (ननधाारण वषा / Assessment Year :2015-2016) Kendrapara Urban Co-Operative Vs Pr.Cit, Cuttack Bank Ltd., College Square, Tinimuhani, Kendrapara-754211 Pan No. :Aaatk 8347 E (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee By : Shri P.C.Sethi, Advocate राजस्व की ओर से /Revenue By : Shri M.K.Gautam, Cit-Dr सुनवाई की तारीख / Date Of Hearing : 30/01/2023 घोषणा की तारीख/Date Of Pronouncement : 30/01/2023 आदेश / O R D E R Per Bench : This Is An Appeal Filed By The Assessee Against The Order Of The Ld Pr.Cit, Cuttack, Dated 24.03.2020, Passed In Din & Order No.Itba/Com/F/17/2019-20/1026884702(1) For The Assessment Year 2015-2016. 2. The Appeal Of The Assessee Is Barred By 8 Days. The Assessee Through Its Secretary Has Filed An Application Dated 13.07.2020 Stating Therein Sufficient Reasons For Condonation Of Delay, To Which Ld. Cit-Dr Did Not Object. In View Of The Above, Delay Of 8 Days In Filing The Present Appeal Is Condoned & The Appeal Of The Assessee Is Heard Finally. 3. It Was Submitted By The Ld. Ar That The Original Assessment In The Case Of The Assessee Was Completed U/S.143(3) Of The Act On 20.11.2017. It Was The Submission That The Assessment Was A Limited Scrutiny

For Appellant: Shri P.C.Sethi, AdvocateFor Respondent: Shri M.K.Gautam, CIT-DR

Section 143(3)Section 14ASection 263Section 36(1)(viia)Section 40

M/S Mkc Infrastructure Ltd., Anjar vs. The Asstt. Commr. Income Tax, Circle, Gandhidham

The appeal of the assessee is partly allowed

ITA 91/RJT/2015[2010-11]Status: DisposedITAT Rajkot13 Jan 2023AY 2010-11

Bench: The Hearing Of Appeal.”

For Appellant: Shri Mehul Ranpura, A.RFor Respondent: Shri Shramdeep Sinha, CIT-D.R

Section 13Section 143(3)Section 80I

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH VIRTUAL COURT] Before: Shri Waseem Ahmed, Accountant Member And

Corp Circle-1(2), Chennai vs. Cccl-Edac Energy Ltd, Chennai

In the result, the appeal filed by the Revenue is dismissed

ITA 3223/CHNY/2018[2012-13]Status: DisposedITAT Chennai14 Dec 2022AY 2012-13

Bench: Shri Mahavir Singh & Shri Manoj Kumar Aggarwalआयकरअपीलसं./Ita No.: 3223/Chny/2018 िनधा"रण वष"/Assessment Year: 2012 - 13 The Dcit, Cccl-Edac Energy Ltd., Corporate Circle 1(2), Vs. 88, Spic House, Mount Road, Chennai. Guindy, Chennai – 600 032. Pan: Aaecc 0167F (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri D. Hema Bhupal, Jcit ""यथ" क" ओर से/Respondent By : Shri G. Tarun, Advocate सुनवाई क" तार"ख/Date Of Hearing : 14.12.2022 घोषणा क" तार"ख/Date Of Pronouncement : 14.12.2022 आदेश /O R D E R Per Mahavir Singh: This Appeal By The Revenue Is Arising Out Of The Order Of Commissioner Of Income Tax (Appeals) – 1, Chennai In Ita No.264/Cit(A)-1/2014-15 Dated 24.08.2018. The Assessment Was Framed By The Acit. Corporate Circle 1(2), Chennai For The Assessment Year 2012-13 U/S.143(3) Of The Income Tax Act, 1961 (Hereinafter The ‘Act’) Vide Order Dated 31.12.2014. 2. The Only Issue In This Appeal Of Revenue Is Against The Order Of Cit(A) Deleting The Addition Made By Ao On Retention Money Held By Contractee. For This, Revenue Has Raised The Following Two Effective Grounds:- “2. The Ld. Cit(A) Failed To Appreciate On The Facts & Circumstances Of The Case That Retention Money Held By Contractees Of The Assessee Having Been Excluded From The Computation Of Total Income, The Claim Of Expenditure Retention Money Payable To Its Sub-Contractors Can Only Be Allowable On Payment & Not On Accrual.

For Appellant: Shri D. Hema Bhupal, JCITFor Respondent: Shri G. Tarun, Advocate

Section 143(3)

only issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by AO on retention money held by contractee. For this, Revenue has raised the following two effective grounds:- “2. The ld. CIT(A) failed to appreciate on the facts and circumstances ... case that retention money held by contractees of the assessee having been excluded from the computation of total income, the claim of expenditure retention money payable to its sub-contractors can only be allowable on payment and not on accrual. 3. The ld.CIT(A) failed to appreciate that the assessee

Nagin G. Suthar, Mumbai vs. ITO 22 (2)(4), Mumbai

In the result, these appeals filed by the assessee are partly allowed

ITA 3185/MUM/2019[2009-10]Status: DisposedITAT Mumbai30 Nov 2022AY 2009-10

Bench: Shri M. Balaganesh, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Shri Bhupendra ShahFor Respondent: 07.09.2022

Section 143(3)Section 250

pleaded for giving credit of TDS in that year. We direct the ld. A.O. accordingly. 21. Ground no. 4 pertains to the addition on retention money amounting to Rs.6,21,180/- which according to the assessee is chargeable only in the year of receipt ... assessee has relied on the decision of the Associated Cables 286 ITR 0596 (Bom) which held that “The payment of retention money in the case of contract is deferred and is contingent on satisfactory completion of contract work. The right to receive the retention money is accrued only after

Bsr Infratech India Limited, Bangalore vs. Deputy Commissioner of Income Tax, Central Circle-2(1), Bangalore

In the result, the appeal of the assessee is partly allowed

ITA 697/BANG/2022[2017-18]Status: DisposedITAT Bangalore27 Oct 2022AY 2017-18

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year: 2017-18

For Appellant: Shri Madhusudhan, A.RFor Respondent: Shri Praveen Karanth, D.R

Section 199Section 234ASection 270ASection 43Section 43C

Appeals) erred in confirming the said addition 4. The Ld. Assessing Officer erred in construing that change in recognition principles of retention money amounts to change in method of accounting and Ld. CIT (Appeals) erred in confirming the issue in favour of revenue. 5. The Ld. Assessing Officer failed ... consider various landmark judicial pronouncements vide which it has been well settled that retention money is not in the nature of income till the time related contractual obligations are fully performed which stand was upheld by the Ld. CIT (Appeals) 6. The Ld. CIT (Appeals) failed to appreciate that

DCIT, CC-2(1), Chennai vs. M/S Enexio Power Cooling Solutions India Private Limited, Chennai

The appeal stands dismissed

ITA 869/CHNY/2020[2017-18]Status: DisposedITAT Chennai21 Sept 2022AY 2017-18

Bench: Hon’Ble Shri V. Durga Rao & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Shri Saroj Kumar Parida (Advocate)-Ld. ARFor Respondent: Dr. S. Palanikumar (CIT) – Ld. DR

Section 143(3)

facts and in the circumstances of the case and in law, the Hon'ble Tribunal was right in directing the AO to quantify the retention money payment only on accrual basis and not on actual payment basis, whereas the disallowance was made on the expenditure relatable to withheld amount ... aside and that of the Assessing Officer restored. As is evident, the sole subject matter of appeal is taxability of retention money. 2. The Registry has noted the delay of 47 days in the appeal, the condonation of which has been sought by Ld. CIT-DR. Considering the fact that

United Breweries Ltd, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-7(1)(1), Bengaluru

ITA 2569/BANG/2017[2013-14]Status: DisposedITAT Bangalore01 Jun 2022AY 2013-14

Bench: Shri N.V. Vasudevan, Vice Preseident & Shri Padmavathy S

For Appellant: Shri K.R. Vasudevan, AdvocateFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru

Section 143(3)Section 92Section 92B(1)

mentioned are very general in nature c) Payment schedule is not linked to various milestones achieved in delivery of services d) Absence of any retention money e) Absence of any penalty clause IT(TP)A No.2569/Bang/2017 Page 12 of 84 f) Vast scope indemnity and limitation of liability granted

ACIT-24(3), Mumbai vs. Mohd, Nisar Yunus Sheikh, Mumbai

ITA 4125/MUM/2018[2007-08]Status: DisposedITAT Mumbai25 Feb 2022AY 2007-08

Bench: Shri Pramod Kumar & Shri Kuldip Singh

For Appellant: Shri Gyaneshwer Kataram, A.RFor Respondent: Ms. Neha Thakur, D.R

Section 148

certified billing charts and confirmations from the contractors to support the fact that the additions made by the Assessing Officer is incorrect since the retention money is offered in subsequent years and was that MCGM had deducted monies on account of their supplying other services which were deducted from ... testing charges, excavation charges amounting to Rs.10,92,714/- is deleted. In respect of addition of Rs.28,69,294/- for deduction on account of retention money by MCGM, the assessee has declared the income in subsequent years. In view of the said amount is declared -subsequent years the addition

M/S Kariganur Mineral Mining Industry, Hospet vs. The Assistant Commissioner of Income Tax Circle - 1, Bellary

In the result, the appeal filed by the assessee for AY 2012-13 is partly allowed and the appeal filed for AY 2013-14 is allowed

ITA 1539/BANG/2018[2013-14]Status: DisposedITAT Bangalore22 Feb 2022AY 2013-14

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaran

For Appellant: Shri Siva Prasad Reddy, A.RFor Respondent: Shri Sumer Singh Meena, D.R

Entire sale proceeds as per E-auction bit sheets/invoices has to be assessed to tax as trading receipts, since retention money is part of sale proceeds only. Hence it constitutes income in the hands of the assessee. Since the assessee is following mercantile system of accounting, it cannot be taxed

M/S Kariganur Mineral Mining Industry, Hospet vs. The Assistant Commissioner of Income Tax Circle-1, Bellary

In the result, the appeal filed by the assessee for AY 2012-13 is partly allowed and the appeal filed for AY 2013-14 is allowed

ITA 1538/BANG/2018[2012-13]Status: DisposedITAT Bangalore22 Feb 2022AY 2012-13

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaran

For Appellant: Shri Siva Prasad Reddy, A.RFor Respondent: Shri Sumer Singh Meena, D.R