Company can follow cash accounting system for tax purposes even though section 209(3) of Companies Act mandates accrual system

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 ...