Law: Income Tax Act, 1922

Section: 4,13

Law: Sales Tax Act, (III of 1951)

Section: 27

(a) Income tax Act (XI of 1922)--S. 4 Total income of assessee is chargeable to tax which is received or deemed to be received or which may arise or accrue to him during previous year If income has accrued or deemed to accrue but has not been received then it can be charged to tax Words "accrue and arise" Meaning. Cement Agency Ltd. v. Income tax Officer, Central Circle II, Karachi and another 1965 P T D 337 ; P L D 1969 S C 318 and Ali & Roberts (Bahawalpur) Ltd. v. Commissioner of Income tax 1966 P T D 94 ref. (b) Income tax Act (XI of 1911) S. 4 Mercantile system of accounting Receivability not the only test of accrual of income Income which may have arisen, accrued or deemed to accrue without receiving same shall be included in total income of assessee and charged to tax Accrual of income does not depend upon entry in books of account. Octavous Steel & Co. Ltd. v. The Commissioner of Income tax, Dadu P L D [960 S C 371 ref. (c) Income tax Act (XI of 1912)-- S. 4 Debits or credits which exist in a particular year, in their maturity in a subsequent year will relate back to the year in which they accrued or "historically belong" If right to get refund existed in an accounting year but order for its refund is passed or refund is made in a subsequent year then such credit shall be deemed to have accrued in account year when the assessee became entitled to such credit. Commissioner of Indian Revenue v. Newcastle Breweries Ltd. (1927) 12 Tax Cas. 927 ; Bernhard v. Gahan 13 I. T. C. 723 ; Isaac Holden Sons Ltd. v. The Commissioner of Inland Revenue (1942) 12 I T C 768 ; Serverne (H. M. Inspector of Taxes) v. Dadswell 35 Tax Cas. 649 and A. Gajpalhi Naidu v. Commissioner of Income tax, Madras (1960) 40 I T R 280 ref. (d) Income tax Act (XI of 1921) Ss. 4 & 13 Provisions of S. 13, mandatory Assessee has option to choose any method of accounting for purpose of maintaining accounts provided income, profits and gains can be properly deduced therefrom Assessee if chooses such method which is regularly employed by him then unless it is hit by proviso to S. 13, Department is bound to consider matter in light of mode of accounting employed by assessee Mercantile…

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