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2015 (8) TMI 471 - HC - Income TaxDisallowance of deduction of the "lease equalisation" charges from the lease rental income - Held that:- Even if at the relevant time, it was not mandatory to adopt the methodology prescribed by the guidance note or for that matter the accounting standard as it was not notified by the Central Government in the Official Gazette, in our opinion, it is not relevant for the reason that, as long as there was a disclosure of the accounting policy in the accounts, which had a backing of a professional body, such as the Institute of Chartered Accountants of India, it could not be discarded by the Assessing Officer. It is well settled that the word "may" normally indicate that the provision is not mandatory. It is also true that the word "may" can also be used in the sense "shall" or "must" by the Legislature. The intent of the Legislature, however, will have to be gathered from the scheme of the relevant provision, Chapter or the relevant statute and also judicial pronouncements dealing with the relevant provision. Having regard to the provisions contained in section 145 of the Act, we are of the opinion that the word "may" used in sub-section (2) thereof cannot be read as "shall". Merely because, the Central Government has not notified in the Official Gazette "accounting standards" to be followed by any class of assessees or in respect of any class of income, it cannot be stated that the "accounting standards" prescribed by the Institute of Chartered Accountants of India or the accounting standards reflected in the "guidance note" cannot be adopted as an accounting method by an assessee. Thus, this submission also deserves to be rejected. Notwithstanding the fact that the opinion of the Institute of Chartered Accountants of India was expressed in the guidance note, which had not attained a mandatory status, would not, in our view, be a ground to discard the books of account of the assessee or method of accounting for lease followed by the assessee and disallowing the assessee to deduct the lease equalisation charges from the lease rental income. - Decided in favour of the assessee
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