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ITAT held retention money was not assessees income, and deleted addition.
ITAT held retention money was not assessees income, and deleted addition.
In Amarshiv Constructions case AO noticed that assessee had deducted Rs 50 lakhs from profits, being retention money retained by assessees clients. AO rejected deduction claim and made addition. CIT(A) dismissed assessees appeal. ITAT following its Cordinate Benchs and High Courts decision in assessees own case, held retention money was not assessees income, and deleted addition.
1. Amarshiv Constructions was in the construction business.
2. It declared total income of Rs 65 lakhs and subsequently revised it to Rs 58 lakhs.
3. Assessment was framed u/s 143(3) and total income was determined at Rs. 1.2 crore.
4. AO noticed that assessee had deducted Rs 50 lakhs from profits, being retention money/security deposits which were retained by persons for whom assessee had undertaken contract work.
5. AO rejected the claim of deduction and made addition.
6. CIT(A) dismissed the appeal of the Assessee.
On appeal, the ITAT held as under:
7. We find that on identical facts in A.Y. 2009-2010, the Co-ordinate Bench of Tribunal while deciding the appeal in ITA No. 258/A/2013 order dated 30.04.2015 by following the decision of Hon'ble Gujarat High Court in Assessee's own case for A.Y. 92-93, decided the issue in favour of the Assessee.
8. We therefore, respectfully following the decision of the Co-ordinate Bench of the Tribunal and the ratio of decision of Hon'ble Gujarat High Court in Assessee's own case, hold that the A.O was not justified in considering the retention money withheld by Assessee's clients as income of Assessee in the year under consideration and therefore direct the deletion of addition made by A.O.
