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2014 (11) TMI 480 - HC - Income TaxMethod adopted for preparation of books of accounts – Difference in accounting method - EMI method to account the finance charges for the income tax purposes - hire purchase agreement - Held that:- Assessee relied on the decision of Commissioner of Income Tax v. Ashok Leyland Finance Ltd. [2012 (7) TMI 590 - Madras High Court] - Section 145(1) of the Income Tax Act prior to its amendment by the Finance Act, 1995 provided for computation of income from business or profession or income from other sources in accordance with the method of accounting regularly employed by the assessee - many assessees are following the hybrid method in a manner that does not reflect the correct income - The Finance Act, 1995 has amended section 145 of the Income Tax Act to provide that income chargeable under the head ''Profits and gains of business or profession'' or ''Income from other sources'' shall be computed only in accordance with either the cash or the mercantile system of accounting, regularly employed by an assessee - Prior to this amendment, the first proviso to sub-section (1) of section 145 gave an option to the assessee to determine the income by adopting any one of the methods - the assessee are justified insofar as following one system of accounting for the purpose of books of accounts and another for the purpose of determination of tax – Decided in favour of assessee.
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