Case Law Details
DCIT Vs Five Star Construction P. Ltd (ITAT Delhi)
The assessee is found to have maintained two accounts in the name of builders in the books of account maintained by it in the regular course of its business. The first account is under the title ‘Mobilisation advance account’ in which the advances received and required to be adjusted against the running bills have been credited and stand adjusted from time to time. The second account is in the name of M/s Matrix Buildwell Private Limited as a running account in which the assessee has received payments in advance towards contracts and raised debits for the certified work by raising running bills. We have also perused the running bill laid at the assessee’s paper book at page 38. This bill reveals that the assessee has adjusted an amount of Rs. 2,00,146/- out of mobilization advance amount and the balance of the running bill amount has been routed through the running account of the builder client. The amount received as mobilization advance is not towards a contract receipt, but is merely an advance for mobilizing resources by the assessee for carrying out the work of its customer/client. This amount is required to be adjusted proportionately against the running bills for the work certified. The amount of mobilization account that has been adjusted during the year under consideration has been included as assessee’s income whereas the balance outstanding remains as a current liability for the year. The same is liable to be adjusted against the future running bills in the subsequent year. Essential this receipt was not in the nature of income. Merely because tax at source has been deducted by the builder, the receipt of mobilization money cannot be deemed as income of the assessee for the year under consideration. We, therefore, do not find any error in the decision reached by the Ld. CIT (A) in deleting the addition on this count. Finding no merit in this ground raised by the revenue, the same stands rejected.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the revenue for Assessment Year 2007-08 against the order dated 15.02.2011 passed by Ld. CIT (A)-XIII, New Delhi, raises the following grounds:-
“1. On the facts and circumstances of the case and in law, the CIT (A) has erred in deleting the addition of Rs.37,29,738/-on account of mobilization advance.
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