The JtCIT(OSD), Calicut V. M/s. Chandragiri Constructions, Kasargode

ITA 173/COCH/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3855 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: C B M WARRIER

Judgement Text

ITA NO S. 171 TO 173/C/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/ SHRI B P JAIN , AM & GEORGE GEORGE K, JM ITA NO S. 171 TO 173/COCH/2016 (A SST YEAR S 2009 - 10 TO 2011 - 12 ) THE JT COMMR OF INCOME TAX (OSD) CENTRAL CIRCLE 1 KOZHIKODE VS M/S C HANDRAG I RI CONSTRUCTIONS THEKKIL PO CHATTANCHAL KASARGOD 761 54 ( APPELLANT) (RESPONDENT) PAN NO. AABFC 7523K ASSESSEE BY SH C B M WARRIER REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 8 TH AUG 2016 DATE OF PRONOUNCEMENT 8 TH AUG 2016 ORDER PER BENCH ; TH ESE APPEALS, AT THE INSTANCE OF THE REVENUE , ARE D IRECTED A GAINST THREE SEPARATE ORDERS OF THE CIT(A), ALL DATED 20.1.2016. THE RELEVANT ASSESSMENT YEARS ARE 2009 - 10 T O 2011 - 2012 . 2 SINCE COMMON ISSUE IS RAISED IN THESE APPEALS AND THEY PERTAIN TO THE SAME ASSE SSEE, THE Y WERE HEAR D TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER. 3 THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHE THER THE RETENTION AMOUNT IN RESPECTS OF A CONTRACT IS TAXABLE IN THE YEAR OF RAISING THE BILL OR THE YEAR IN WHICH IT IS RECEIVED. ITA NO S. 171 TO 173/C/2016 2 4 THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE AO HAD BROUGHT TO TAX THE RETENTION AMOUNT . THE AMOUNT BROUGHT TO TAX WAS RS. 83,15,723/ - ; RS. 98,00,516/ - AND RS.43,75,999/ - FOR THE AYS 2009 - 10 TO 2011 - 12 RES PECTIVELY . 5 AGGRIEVED BY THE ASSESSMENT ORDER IN BRING ING TO TAX THE RETENTION AMOUNT, THE ASSESSEE PREFERRED APPEALS BEFORE T HE FIRST APPELLATE AUTHORITY. BEFORE THE CIT(A), IT WAS CONTENDED THAT THE RETENTION AMOUNT IS THE AMOUNT RETAINED BY THE CONTRACTEE DEPARTMENT OF THE GOVERNMENT , TOWARDS CLEARANCE OF DEFECT LIABILITIES IN TH E EXECUTION OF THE CONTRACT. IT WAS SUBMITTED THAT AS PER THE TERMS OF CONTRACT, THE RETENTION AMOUNT WILL BE ADJUSTE D FROM THE BILL AND THE AMOUNT WILL B E RELEASED ONLY AFTER THE CLEARANCE OF THE CLAIM OF DEFECT LIABILITIES. IT WAS STATED THAT IN THE CASE OF DEFECT, THE ASSESSEE CONTRACTOR HAS TO CURE THE DEFECT TO THE SATISFACTION OF THE CONTRACTEE DEPARTMENT AND THEN ONLY THE RETEN TION AMOUNT WILL BE PAID. IT WAS CONTENDED THAT THE ASSESSEE DID NOT HAVE ANY RIGHT TO RECEIVE THE RETENTION AMOUNT EARLY UNLESS THE CLAIM OF DEFECT LIABILITIES IS CLEARED AND HENCE, THE RETENTION AMOUNT IS TAXABLE ONLY IN THE YEAR OF RECEIPT . THE ASSESSEE RELIED ON THE FOLLOWINGS ORDERS OF THE TRIBUNAL IN ASSESSEE S OWN CASE : I) ITA NO. 660 & 643/COCH/ 2010 - AY 2007 - 08 II) ITA NO. 428 & 470/COCH/2013 AY 2008 - 09 & 2009 - 10 III) ITA NO. 831/COCH / 2008 AY 2002 - 03 IV) ITA NO. 832,857,681,861/COCH/2008 A YS 2003 - 04, 2004 - 05 & 2005 - 06 ITA NO S. 171 TO 173/C/2016 3 6 THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE RETENTION AMOUNT IS TO BE TAXED ONLY IN THE YEAR OF RECEIPT. THE CIT(A) FOLLOWED THE ORDERS OF THE TRIBUNAL IN ASSESSEE S OWN CASE, CITED SUPRA. 7 THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD DR RELIED ON THE ASSESSMENT ORDER S ; WHEREAS THE LD AR RELIED ON THE ORDER S OF THE FIRST APPELLATE AUTHORITY. 8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ISSUE OF TAXABILITY OF RETENTION AMOU NT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COCHIN BENCH OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEARS 2002 - 03 T O 2008 - 09, ( CITED SUPRA ) . THE DEPARTMENT HAS FILED APPEALS U/S 26 0A OF THE I T ACT BEFORE THE H ON BLE JURISDICTIONAL HIGH COURT. IT WAS ADMITTED BY BOTH THE PARTIES THAT THE ORDERS OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE HAS NOT BEEN REVERSED BY THE HON BLE JURISDICTIONAL HIGH C OURT. HENCE, IN VIEW OF THE ORDERS OF THE COORDINATE BENCH OF THE TRIBUNAL, IN ASSESSEE S OWN CASE , CITED SUPRA, WHICH IS IDENTICAL TO THE FACTS OF THE INSTANT CASE, WE HOLD THAT THE CIT(A) IS JUSTIFIED IN DIRECTING THE AO NOT TO BRING TO TAX THE RETENTION AMOUNT, RET AINED BY THE CO NTRACTEE DEPARTMENT OF THE GOVERNMENT. IT IS ORDERED ACCORDINGLY. ITA NO S. 171 TO 173/C/2016 4 9 I N THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF AUG 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 8 TH AUG 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) , KOZHIK ODE 4 . CIT, KOZHIKODE 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN