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2009 (2) TMI 194 - HC - Income TaxMethod of Accounting – Hire Purchase - assessee has claimed deduction of finance commission which was charged as expenditure in the profit and loss account of the assessee. The aforesaid deduction was claimed in the same year in which the hire purchase agreement was entered by the assessee irrespective of the fact that the actual payment was made even in the following years – held that - It is not in dispute that the mercantile accounting system was adopted by the assessee and was permitted by the Revenue for several years. - By virtue of the said accounting system, the assessee was claiming benefit of finance commission in the year of hire purchase agreement itself irrespective of the fact that the amount of instalments as per the hire-purchase agreement was actually paid in the subsequent years - the same system is required to be continued for the assessment years and this arrangement is allowed looking to the peculiar facts and circumstances of the case as the firms have already closed their business and the amount so claimed is not quite higher
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