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2011 (2) TMI 52 - HC - Income TaxChange in accounting polciy - (i) the assessee had been following hybrid system of accounting till the preceding assessment year i.e., assessment year 1988-89; (ii) the assessee had been accounting for income received from advertisement on cash basis, which admittedly had been accepted by the revenue in the preceding years ending with assessment year 1988-1989; and (iii) the Tribunal has returned a finding of fact, in favour of the assessee, that the Assessing Officer’s observation that because expenses against advertisement and publicity had been recorded on accrual basis while, income from the said sources had been recorded on cash basis had created an “imbalance” was without merit. Tribunal was also persuaded to hold that this system of accounting had been accepted by the revenue, as also the fact that, the change in the system of accounting from a ‘hybrid’ to a ‘mercantile’ system was carried out by the assessee for bona fide reasons on account of the amendment carried out in the Companies Act. Where the Tribunal disagreed with the assessee was that having effected a change in the method of accounting, and having recorded its income on the basis of mercantile system, it could not go back to the cash system and hence, proceeded to sustain the order of the Assessing Officer disallowing the deduction. Appeal is allowed
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