Law: Income Tax Act, 1922

Section: 3,6.10,13,8,4

(a) Leave to appeal---income tax Act (XI of 1922), Ss. 3, 6. 10 & 13 Income tax Method of accounting Change by assessee Leave to appeal granted to consider question whether High Court was wrong in not allowing assessee to change method of accounting from Mercantile system to cash system on a wrong interpretation of Ss. 3, 6, 10 & 13 of Income-tax Act, 1922. (b) Income tax Act (XI of 1922) -----Ss. 13, 3, 6 & 10 Scope Scope of exercise of power by Income-tax Officer under S. 13 with reference to Ss. 3, 6 & 10 discussed. Per F. K. M. A. Munim, C. J., Badurl Haider Chaudhary and Chaudhary A. T. M. Masud, JJ. agreeing : (c) Income tax Act (XI of 1922) S. 13 Freedom of an assessee to follow any particular method of accounting Nature of restrictions on such freedom stated Discretion of Income tax Officer to accept method of accounting adopted by assessee Exception. Analysing the terms of the provisions of section 13, Income tax Act, 1922 it appears that two limitations have been imposed on the freedom to maintain the method of accounting. The first is whatever be the method of accounting employed by an assessee it must be regularly employed, the next restriction appears from the proviso to the section which says in case the method employ¬ed by an assessee is such that the Income tax Officer cannot properly deduce the income, profits and gains of an assessee from the method employed by him, he can compute the same upon such basis and in such manner as he may determine. In other words, what it means is that if the method of accounting does not clearly depict the true state of affairs as to the income, profits and gains of an assessee, the Income tax Officer can exercise discretion to find them out by using materials .in any way he likes, the main concern being the correct computation of income, profits and gains of the assessee Freedom to employ any method of accounting has been given to the assessee but the option not to accept it has been conferred on the Income tax Officer under the above mentioned two conditions limiting the freedom of an assessee. An assessee must maintain regularly whatever method of accounting he would prefer and secondly, it must be clear so…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492