AMARSHIV CONSTRUCTION PVT LTD V. ASST. COMMISSIONER OF INCOME TAX

TAXAP/1027/2014

AI Insights

The case involves Amarshiv Construction Pvt Ltd, the appellant, contesting the taxability of retention money for the assessment years 2003-04 and 2007-08. The Income Tax Appellate Tribunal had previously ruled against the appellant, leading to the current appeals. The core legal issue was whether the retention money should be considered taxable income in the year it was retained or in the year it was actually payable. The Gujarat High Court referenced a prior decision in favor of the appellant in a similar case, leading to the allowance of the appeals and a directive on the timing of the taxability of retention money.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 763068 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 23-09-2014
• Assessment Year: misc
• Other Referred Cases: Amarshiv Construction Pvt. Ltd. v. The Deputy Commissioner of Income-Tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K M PARIKH
• Assessee Lawyers: R K PATEL
• Keywords: Assessment Year; Civil construction; Income tax appellate tribunal; Taxability of retention money
• Section: 143(3)

Judgement Text

"O/TAXAP/1026/2014 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO.1026 of 2014 With TAX APPEAL NO.1027 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE HARSHA DEVANI and HONOURABLE MS. JUSTICE SONIA GOKANI ============================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment? 2 To be referred to the Reporter or not? 3 Whether their Lordships wish to see the fair copy of the judgment? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder? 5 Whether it is to be circulated to the civil judge? ============================================= AMARSHIV CONSTRUCTION PVT LTD....Appellant(s) Versus ASST. COMMISSIONER OF INCOME TAX....Opponent(s) ============================================= Appearance: MR RK PATEL, ADVOCATE for the Appellant(s) No.1 MR KM PARIKH, SENIOR STANDING COUNSEL for the Opponent(s) No.1 ============================================= CORAM: HONOURABLE MS. JUSTICE HARSHA DEVANI and HONOURABLE MS. JUSTICE SONIA GOKANI Date : 23/09/2014 COMMON ORAL JUDGMENT Page 1 of 4 O/TAXAP/1026/2014 JUDGMENT (PER : HONOURABLE MS. JUSTICE HARSHA DEVANI) 1. Heard Mr. R.K. Patel, learned advocate for the appellant in both the appeals and Mr. K.M. Parikh, learned senior standing counsel for the respondent. 2. Admit. The following common substantial question of law arises for consideration:- “Whether on the facts and in the circumstances of the case and on appreciation of correct position of law read along with documentary evidence on record the Tribunal’s ultimate finding and the conclusion of taxability of retention money for the year under consideration is contrary to settled position of law and against the documentary evidence on record?” 3. Having regard to the nature of the controversy involved in both these appeals, which lies in a very narrow compass, with the consent of the learned counsel for the respective parties, the matters are taken up for final hearing today. 4. Both these appeals arise out of common order dated 3rd January, 2014 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘C’ (hereinafter referred to as “the Tribunal”), hence the same were taken up for hearing together and are disposed of by this common judgment. The assessment years are 2003-04 and 2007-08 respectively. For the sake of convenience, reference is made to the facts of Tax Appeal No.1026/2014. Page 2 of 4 O/TAXAP/1026/2014 JUDGMENT 5. The appellant company is engaged in the business of civil construction of Dams, Highways, Railway Earth and Structural Works, etc. For assessment year 2003-04, return of income was filed which was processed by the Assessing Officer and ultimately assessment order was framed under section 143(3) after making certain additions and disallowances. One of the disallowance was in respect of deduction of retention money of Rs.30,80,101/- pertaining to the claim of the appellant company whereby on facts of the case the appellant claimed that the same is not taxable income for the year under consideration. However, the claim of the appellant was rejected by the Assessing Officer. Being aggrieved, the assessee went In appeal before the Commissioner of Income- Tax (Appeals) but failed. The assessee went in second appeal before the Tribunal but did not succeed. 6. It is an admitted position between the parties that the controversy involved in the present cases stands concluded by a decision of this court in the case of Amarshiv Construction Pvt. Ltd. v. The Deputy Commissioner of Income-Tax rendered on 19th March, 2014 in Tax Appeal No.554/2003 and cognate matters wherein the question has been answered in favour of the assessee and against the revenue. Under the circumstances, it is not necessary to record the facts and contentions in detail. 7. For the reasons recorded in the above referred decision of this court in Tax Appeal No.554/2003 and cognate matters, these appeals are also allowed. The question is accordingly, answered in favour of the appellant - assessee Page 3 of 4 O/TAXAP/1026/2014 JUDGMENT and against the revenue. However, the Assessing Officer is directed to tax the retention money in the assessment year relevant to the ‘previous year’ in which the retention money becomes payable to the appellant as per the terms of the contracts i.e. after the defect liability is over and after the Engineer-in-Charge certifies that no liability attaches to the appellant. ( HARSHA DEVANI, J. ) ( MS. SONIA GOKANI, J. ) hki Page 4 of 4 "