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2013 (11) TMI 125 - AT - Income TaxAddition of income – cash system or mercantile system of accounting – Held that:- Provisions of section 145 of the Act have been amended with effect from April 1, 1997 - The assessee can follow either cash system or mercantile system of accounting - Prohibiting the hybrid system of accounting, which the assessee was following in the earlier years - The advances are taken as income in the year of the release of the films which is a faulty practice as the release of the films are not in the hands of the assessee as it is the sole prerogative of the producers of the films, whereas the assessee is enjoying the fruits of the advances from the day he gets them - Restoring the issue back to the files of the Assessing Officer - Assessee has already offered ₹ 53,52,000 in the computation of income in the relevant assessment year - The Assessing Officer is directed to verify the claim of the assessee that he has offered out of the total advance of ₹ 1,10,10,062, ₹ 27,58,062 in the assessment year 2006-07 and ₹ 2,50,000 in the assessment year 2007-08 and if found correct only the balance amount should be taxed in the year under consideration, to avoid double taxation – Decided in favour of assessee. Unexplained cash credits u/s 68 – payment of school fees of children was made by assessee’s mother-in-law - A copy of the confirmation and passport was submitted along with the reply – Held that:- Section 68 is not applicable as nothing has been found credited in the books of the assesse - The above confirmation does not mention the amount which has been paid by Mrs. Claude M. Grout nor she has given any details of her bank account - the mode of payments has also not been mentioned - Assessee has not filed any other corroborative evidence to substantiate the claim that the payment of school fees has been made by his mother-in-law - the assessee has failed to discharge the onus cast upon him – Decided against assessee. Disallowance of interest on loan – Amount borrowed for personal usage and purchase of some assets - Held that:- The assessee being a film star has to maintain a certain set of standard of living for which he may require money from time to time - Assuming that the assessee has borrowed money to purchase luxurious car, that would justify looking to the nature of profession of the assesse – Decided against Revenue.
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