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2010 (7) TMI 209 - HC - Income TaxAddition - Accounting Standard - The assessee changed over from the conventional method to a more rational method prescribed by Accounting Standard-2 under which the indirect travel cost was not to be added to the work in progress. The Assessing Officer did not accept the change in the accounting method and added the traveling cost attributable to the work in progress. The Commissioner (Appeals) confirmed this but the Tribunal directed deletion of the sum from the total income of the assessee on the finding that the change in the accounting system adopted by the assessee was on a sound basis, it was more rational method, the change was bona fide, and that this change was accepted by the Department in all the subsequent years. Held that - according to Accounting standard - 2, indirect travel cost was not to be included in the cost of inventory. However, there had been no verification whether the assessee had added in the cost of inventory, direct traveling cost and only indirect traveling cost was not included because the Assessing Officer had made addition in respect of the entire cost without going into the question as to whether it was direct or indirect cost. Dismissing the appeal.
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