Non-Receipt of Retention Money

This query is : Resolved

Krishna Murty (Querist)
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23 September 2009 One of my claint has executed a work to Satyam Computers during the F.Y 2007-08.Against this work Satyam computers has deducted Retention Money Rs.50 Lakhs. But the Satya computers have refunded the retention money in 2009-10 only Rs.40 Lakhs for full and final settlement.The difference 10 Lakhs already we have booked as turnover at the time of Grossing the Bill amount in 2007-08.Now I want clarification is it possible to show as expenditure in the F.Y 2009-10.How to close the Retention money account and how to set off loss of Rs.10 Laksh for non refund of retention money.

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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23 September 2009 Current year you have to claim it as bad debts. You have to wait for 3years from due date or you should prove that the amount is not reaslisable.

Rajeev

Rajeev (Expert)
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23 September 2009 After It amendment Act wef april 1989 , there is no obligation on the assessee to prove that the debt written off by him is indeed bad debt - the legislature has intentionally left it to the commercial wisdom of the assessee to write off a debt as bad debt based on relevant material in its possession, and once it is written off in books the assessee becomes eligible for claiming deduction. If the AO/commissioner intends to disallow a part of it, then the burden of proof rests on him to establish so with evidence. i dont think so limitation act ( period of 3/6 years applies ), if u feel you cannot realise that amount , you can write it off any time .Latest Case Law : DIT, (International Taxation) Vs M/s Oman International Bank Saog (Dated: February 9, 2009)