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2014 (12) TMI 1056 - AT - Income TaxMethod of accounting to be adopted by assessee – Rejection of mercantile system of accounting - Held that:- The findings of the CIT(A) is mechanical, bordering on the laconic - the fact that the say of the assessee is contrary to the finding of the AO, is the reason an appeal was filed before her - She was required to examine the rival contentions, on the basis of the books of account and submissions tendered - It was no reason for dismissal of an appeal, that too in the second round – as long as income is billed, received, and accounted for in a given year, the system is mercantile - This would get tested only if the AD is able to point out an instance where services stand billed, but payments have not been received, and for this reason, income is not recognized - No such instance has been pointed out, since no such instance exists - income has been recognised on accrual basis, and the method of accounting is clearly mercantile -expenses in any case have been accepted as genuine. Assessee rightly contended that if bills raised are realized in that very financial year, then it cannot be a basis to come to the conclusion that assessee was not following mercantile system of accounting, unless it is demonstrated that services were rendered in one financial year and bill for the same realized in subsequent assessment year- interest income of ₹ 12,127.91 was accounted for on accrual basis – thus, the claim of assessee is accepted – Decided in favour of assesee.
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