Mobilization advance offered for Tax by acceptable method is enough

Last updated: 19 January 2013

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Assessee company in this case is engaged in the business of manufacturing, designing and fabrication of aluminum and architectural products. In this case it was noted that the assessee has shown ` 3,87,74,848/- as mobilization advance under the head ‘current liabilities’. The assessee was asked to provide details of the said advance. In response, the assessee stated that whenever it obtains a new project, it receives 20% mobilization advance from the customer for procuring the material. After the execution of the work, it raises the bill for the work done which is certified by the client. Out of the certified amount, the client deducts portion of mobilization advance apart from TDS and WCT. At the time of certification of the bill some portion of mobilization advance is recognized as income and balance unadjusted mobilization advance kept under the head ‘current liabilities and provisions’. The assessee submitted a list of 11 such entities from whom mobilization advance had been taken.

Citation :
Dy. Commissioner of Income Tax, Circle-1(1), Room No. 390, C.R. Building, New Delhi – 02 (Appellant) Vs. M/s Ahlcon India Pvt. Ltd.,A-177, Okhla Industrial Area, Phase-I, New Delhi – 110 020 (PAN/GIR NO.: AAACA8064H) (Respondent)