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Accrual of income - Scope of ICDS - If there is conflict between Section 5 and Section 145, which would prevail

Dated:- 4-10-2017 - Manual - ICDS I : Accounting Policies The Madras High Court in the case of CIT v Standard Triumph Motor Co. Ltd. [ 1978 (3) TMI 27 - MADRAS High Court] has held that: So it is clear that there can be cases of non-residents to whom .....

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that income on the cash basis, he is not liable to be taxed on the accrual basis. In other words, the question is whether s. 145(1) can be applied in such circumstances. The effect of applying the section would be to take the income outside the purvi .....

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India. In such circumstances, to apply s. 145(1) would be to defeat the charge under s. 4 and to obliterate the provisions of s. 5(2)(b) and let the income which is taxable escape tax. Such a result is not certainly intended by the statute. Section 1 .....

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d of accounting must be followed, unless in any case where the accounts are correct, but the method is such that, in the opinion of the ITO, the income cannot properly be deduced therefrom. But, it must be remembered that s. 145 is only a machinery p .....

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ssee is keeping his accounts in regard to a particular income regularly on the cash basis. Even if the assessee is keeping his accounts on the cash basis in regard to his income, the assessee is liable to tax under s. 5(2)(b). To hold otherwise would .....

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on. We cannot give to s. 145(1) such an overriding effect as to defeat the charge and the provisions of s. 5(2)(b). Assessee took the matter before the Supreme Court. Honorable Apex Court in [1993 (2) TMI 9 - SUPREME Court] has held that: The assesse .....

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he books of the assessee cannot amount to receipt and that the amounts cannot be assessed until they were actually paid over to the non-resident company or dealt with according to its directions. Rejecting the contention, it was held by this court th .....

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, the method of accounting adopted by the assessee for the relevant accounting years is really irrelevant. As explained hereinbefore, the very concept of receipt as espoused by the assessee is untenable and unacceptable. On the issue of conflict betw .....

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