Amendment of section 145
50. In section 145 of the Income-tax Act, with effect from the 1st day of April, 2015,—
(i) in sub-section (2), for the words “accounting standards”, the words “income computation and disclosure standards” shall be substituted;
(ii) in sub-section (3), for the words, brackets and figure “or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee”, the words, brackets and figure “has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2)” shall be substituted.
Notes on Clauses:
Clause 50 of the Bill seeks to amend section 145 of the Income-tax Act relating to method of accounting.
The existing provisions contained in sub-section (1) of the said section provide that Income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” shall, subject to the provisions of sub-section (2) of the said section, be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The existing provisions contained in sub-section (2) of the said section provide that the Central Government may notify in the Official Gazette from time to time, the accounting standards to be followed by any class of assessees or in respect of any class of income. The existing provision of sub-section (3) of the said section provides that where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144.
It is proposed to amend sub-section (2) of section 145 to provide that the Central Government may notify in the Official Gazette from time to time income computation and disclosure standards to be followed by any class of assessees or in respect of any class of income.
It is also proposed to amend sub-section (3) of the aforesaid section to provide that where the Assessing Officer is not satisfied with the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1), has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in section 144.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
