Case Law Details
DCIT Vs Stup Consultants Pvt. Ltd.
(ITAT Mumbai)
(Decided on 09.09.2011)
Assessee has been following cash system of accounting and this method has been regularly employed by the assessee in recording its day today business transaction. It is not a case where the assessee has been maintaining its accounts of day to day business under the mercantile system of accounting and thereafter prepares accounts in accordance with cash system of accounting for income tax purposes. The AO has placed strong reliance on the decision of the ITAT Delhi in the case of Amarpali Mercantile Pvt. Ltd.(supra).
On a closer examination of the facts of that case it is seen that consequent to introduction of section 209(3) of the Companies Act 1956 the assessee in that case started maintaining its accounts on mercantile system of accounting w.e.f. 1/4/1988. The relevant assessment year was 1988-89. For A.Y 1988-89 the assessee filed its return of income on cash system of accounting. It was a finding of fact in that case that method of accounting regularly employed by the assessee for the purpose of its business was mercantile system of accounting. It is only for income tax purposes accounts had been drawn up as per cash system of accounting. In the case of the assessee in the present case the facts are otherwise. As we have already held that the assessee regularly employing cash system of accounting for the purpose of its day to day business activities. Further in the case of the assessee it was not the dispute in the year of change. As we have already seen the assessee’s method of accounting for tax purposes has been cash system of accounting and had been accepted by the revenue from A.Y 1983-84. Therefore, the decision in the case of Amarpali Mercantile Pvt. Ltd(supra) will not be applicable.
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