Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2018 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 1341 - HC - Income TaxMethod of accounting - following mercantile system or project completion system in one project and the cash method of accounting in the another - Held that:- Subsection 1 of Section 145 of the Income Tax Act, 1961 provides that income payable under the head “profit and loss account of business” and income from other source shall subject to the provisions of Subsection 2 be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. In terms of this provision, therefore, the choice of the assessee would be either of following mercantile or cash system of accounting. The assessee, however, cannot choose to follow mercantile system for all other projects and make a departure only for one of the projects by changing the system of accounting. The Tribunal, therefore, correctly held this issue against the assessee. The assessee was bound to follow the mercantile system of accounting and offer the income to tax on the basis of accrual and not actual receipts. The assessee had claimed to have acquiesced certain rights in the property in question by way of assignment. Further, even when the Urban Land Ceiling Act was still in forced, such rights the assessee desired to pass on to the assignee for which the deed of assignment was executed. The assessee had never questioned such deeds. In fact, once ULC Act was repealed, such arrangement was finalised. Further, whatever be the nature of the agreement and accrual of rights in favour of the purchaser of the land or the assignor or the assignee the assessee never argued that its right to receive the consideration was under jeopardy. Under the assignment agreement itself there was specific mention of transfer of rights in the property in lieu of which the assignee would pay agreed sum to the assessee. - Decided against assessee.
|