COMMISSIONER OF INCOME, INTERNATIONAL Vs. BECHTEL INTERNATIONAL INC

JUDGEMENT

(1.) This Appeal is filed by the Revenue to challenge the order of the Income Tax Appellate Tribunal. The following question is presented for our consideration :

(2.) Brief facts are as under : The Respondent is a Company engaged in construction work. For the Assessment Year 2002-03, the Respondent had filed a Return of Income. While carrying out the scrutiny assessment of the said Return, the Assessing Officer questioned the Assessee about the non-inclusion of two amounts of Rs.26.47 Crores (rounded off ) and Rs.59.51 Crores (rounded off ), for which Assessee had raised the bills, but not accounted for in its income. The Assessing Officer rejected the Assessee's contention that these amounts had not accrued to the Assessee and therefore, even on the basis of mercantile system of accounting, the same do not have to be offered to tax. The Assessing Officer was of the opinion that since the Assessee had raised the bills whether payments were made or not would not be relevant in view of the fact that the Assessee followed mercantile system of accounting. In Appeal, Commissioner of Income Tax (Appeal) granted partial leave to the Assessee. In relation to the amount of Rs.59.51 Crores, the Commissioner was of the opinion that the same could not have been brought to tax since the bill pertained to mobilization and site operation costs, which bill was raised after termination of contract. However, with respect to the sum of Rs.26.47 Crores, the Commissioner of Income Tax (Appeals) did not grant relief primarily on the ground that the bill raised by the Assessee pertained to construction work already carried out before the termination of the contract. We may however, record that to the limited extent of Rs.2.43 Crores, out of the said amount, the Commissioner granted relief on the ground that the same was already taxed in the earlier year. The Assessee carried the matter further before the Appellate Tribunal.

(3.) The Department also filed independent Appeal to the extent the decision of the Commissioner of Income Tax, (Appeal) were against the Revenue. The Tribunal by the impugned common Judgment allowed the Assessee's Appeal and dismissed the Revenue's Appeal.