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2013 (11) TMI 924 - AT - Income TaxMethod of accounting – Cash system of accounting or Mercantile system of accounting - Whether assessee is bound to follow the same method of accounting on continuous basis and not permitted to change the same - Held that:- The assessee on its part succeeded in establishing the change of bona fide because it had ceased to have any business income and had adopted the change well before the search as well as completion of assessment for block period and also before coming of Circular of No.2 of 2002 on the Statute - Since the assessee had followed the same system in all the subsequent years, we see no reason as to why the assessee's choice/preference to adopt the changed system of accounting be not accepted - In view of the totality of the facts and circumstances of the case as well as settled provisions of laws discussed hereinbefore, we are of the opinion that the assessee had right to adopt the changed system of accounting and by changing the system of accounting from mercantile to cash was a bona fide change - Decided in favour of the assessee. Treatment of interest income on on re-purchase of deep discount bonds (DDB) - Held that:- the learned CIT (A) was not justified in sustaining (i) the addition of Rs.1.19 crores by treating the same as interest income on re-purchase of 700 DDBs and, consequently (ii) confirming the disallowance of Rs.1.19 crores being the assessee's claim u/s 54EC of the Act. - decided in favour of assessee.
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