IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 14.07.2009 CORAM: THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLA and THE HONOURABLE MR.JUSTICE B.RAJENDRAN Tax Case Appeal Nos.577 & 578 of 2009 The Commissioner of Income-tax, Erode. .. Appellant in both Appeals vs. P & C Constructions (P) Ltd. Eorde. .. Respondent in both Appeals TC(A)577/09: Tax appeal filed under Section 260-A of the Income Tax Act arising the order dated.31.10.2007 passed by the Income Tax Appellate Tribunal'D' Bench Chennai in ITA.No.2557/Mds/05 arising the order of the Commissioner of Income Tax(Appeal)-I, Coimbatore,dated.22.8.2005 and made in Appeal No.248/2005-2006, arising the order of the Deputy Commissioner of Income Tax,Circle-I, Erode, dated.29.3.05 and passed in AABCP 2483L/ICCP 0002,Assessment Year 1999-2000. TC(A)578/09: Tax appeal filed under Section 260-A of the Income Tax Act arising the order dated.31.10.2007 passed by the Income Tax Appellate Tribunal'D' Bench Chennai in ITA.No.2558/Mds/05 arising the order of the Commissioner of Income Tax(Appeal)-I, Coimbatore,dated.22.8.2005 and made in Appeal No.249/2005-2006, arising the order of the Deputy Commissioner of Income Tax,Circle-I, Erode, dated.24.3.05 and passed in AABCP 2483L/ICCP0002,Assessment Year 2000-2001. For appellant : Mr.T.Ravikumar J U D G M E N T (Judgment of the Court was made by B.RAJENDRAN,J.) The Revenue filed these appeals against the order of the Income Tax Appellate Tribunal, Chennai Bench "D", made in I.T.A. Nos.2557 & 2558/Mds/05 dated 31.10.2007. https://hcservices.ecourts.gov.in/hcservices/ 2. The Assessing Officer, while completing the proceedings under Section 143(3) r/w. Section 147, brought to tax the retention money and additional security deposit in the account of the assessee. The Assessing Officer found that the assessee omitted to admit the entire contract receipts that had been shown in the TDS Certificate and in the P & L Account. Aggrieved against the said assessment order, the assessee filed an appeal to the Commissioner of Income Tax (Appeal), who deleted the addition made by the assessing officer in relation to the retention money as well as the additional security deposit. Aggrieved against the said order of CIT (A), the Revenue filed an appeal to the Tribunal. The Tribunal, after considering the decisions rendered by this Court in Igni Fluid Boilers (283 ITR 295) and East Coast Constructions (283 ITR 297), concluded that these two amounts cannot be included in the assessee's income and thus rejected the appeal preferred by the Revenue and confirmed the order passed by the Commissioner of Income Tax (Appeal). Aggrieved against the said decision, the Revenue has come forward with the present appeals. 3. The only question of law which was sought to be presented before this Court by the Revenue is " whether in the facts and circumstances of the case, the Tribunal was right in holding that the retention money and the additional security deposit had not accrued to the assessee and was not taxable during the assessment year under appeal? " 4. On a careful reading of the facts and circumstances of the case, it is very clear that the assessee could not receive the retention money in the case of a contract which was retained by the contractee for the purpose of the successful completion of the contract. We are guided by the two earlier rulings of the Division Bench of this Court reported in Igni Fluid Boilers (283 ITR 295), wherein in identical circumstances, this Court has held that the retention money had not been received in respect of the relevant assessment year, though the work had been completed and that the assessee was only entitled to receive the amount after the successful completion of the work. In such circumstances, it could not be said that 10 per cent of the amount retained had accrued to the assessee and hence, it was not assessable in the assessment year wherein it was sought to be done by the department. Similarly, in the decision reported in East Coast Constructions (283 ITR 297), in identical circumstances, while dismissing the appeal filed by the Revenue, the Court has come to the conclusion that the assessee was entitled to receive the retention money after completion of the contract. On the date of the bill, no enforceable liability had accrued or arisen. When the assessee had no right to receive the money by virtue of the contract between the parties and the assessee also had no right to enforce payment, it could not be said that the right to receive payment of the remaining 10 per cent of the value of job had accrued. https://hcservices.ecourts.gov.in/hcservices/ 5. Following the above said two decisions, we also come to the conclusion that as regards the additional security deposit amount, it admittedly could be lying with the department or contractee till the successful completion of the contract to the satisfaction of the contractee. This amount of additional security deposit, if at all it is to be repaid by the department concerned, it would be only after the total completion of the contract. Therefore, even though the contract was over, the assessee would not be able to lay his hands till the contract is successfully concluded and accepted by the contractee. Therefore, what applies to the retention money in the above said two decisions would equally apply to the additional security deposit amount also. Accordingly, we concur with the above referred to decisions in respect of additional security deposit also and we hold that the department cannot include the said amount for the assessment year when actually this amount has not been paid to the assessee. 6. For the foregoing reasons, we conclude that the finding given by the Tribunal was well reasonable and in accordance with law. Hence, we find no reason to interfere with the order of the Tribunal inasmuch as the question of law sought to be pleaded by the Revenue has already been answered by this Court in the above said two decisions. The appeals do not merit acceptance and they stand dismissed. Consequently, M.P.No.1 of 2009 is closed. NO costs. Sd/- Asst.Registrar /True Copy/ Sub.Asst.Registrar gs To 1. The Assistant Registrar, Income Tax Appellate Tribunal, Rajaji Bhavan,3rd Floor, Besant Nagar, Chennai-90. 2. The Secretary, Central Board of Revenue, New Delhi. 3. The Income Tax Appellate Tribunal, Chennai Bench "D". 4. The Commissioner, Income Tax (Appeal_-I, Coimbatore. 5. The Deputy Commissioner, Income Tax, Circle I, Erode. https://hcservices.ecourts.gov.in/hcservices/ + 1 cc to Mr.J.Naresh Kumar,Advocate,SR.31204 Tax Case Appeal Nos.577 & 578 of 2009 CKN(CO) EM/21.8.09 https://hcservices.ecourts.gov.in/hcservices/