In mercantile system, liability arisen in the year is allowable even if paid later

ACIT Vs Maharashtra State Electricity Transmission Company Ltd (ITAT Mumbai) As assessee is following mercantile system of accounting, liability which has arisen during the year under consideration is allowable even though the same may have to be discharged at a future date. Facts- The assessee is one of the successor companies to the erstwhile Maharashtra State Electricity Board (MSEB). On the demerger, the assets of MSEB to the extent it pertained and were specifically allocable to the transmission undertaking and were transferred to the assessee. Similarly, liabilities of MSEB to the extent...