ICDS III — the law in short
What the courts have decided on section ICDS III, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Aryacon Contractors and Engineers Pvt Ltd v ACIT — retention money is contract revenue from AY 2017-18, whatever the older case law says
ITATHelps departmentValidity unconfirmed
My contractor client did not offer performance retention withheld by the awarder. The Assessing Officer has added it for AY 2017-18. Can I rely on the accrual cases?
Not for AY 2017-18 onwards. The Tribunal held that where the assessee follows the mercantile system it must account for all receipts on accrual basis, and that retention money could not be excluded when there is an express provision in the Act brought in by the Finance Act 2018 with retrospective effect from 1 April 2017. Section 43CB and ICDS III state that contract revenue shall include retention money, so the earlier case law is not relevant in determining the taxability of retention money in the case of a contractor.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.