Retention money is not income under Minimum Alternate Tax

By | March 18, 2017
(Last Updated On: March 18, 2017)

“Retention money” not regarded as income under minimum alternate tax

The Kolkata Bench of the Income-tax Appellate Tribunal held that retention money is not in the nature of income until such time that the taxpayer performs the contractual obligations to the satisfaction of the customer. On the date when the bills were submitted, having regard to the nature of the contract, no enforceable liability accrued or arose, and the taxpayer had no right to receive the entire amount on the completion of the work or upon submission of the bills. Therefore, retention money cannot be regarded as income for computing minimum alternate tax. The case is: Mcnally Bharat Engg. Co. Ltd. Read a March 2017 report [PDF 348 KB] of KPMG

Leave a Reply

Your email address will not be published.