Law:

Section:

Section 145 of the Income-tax Act, 1961 - Method of accounting - Change of - Assessment year 1980-81 - Assessee foregone professional fees receivable from foreign company due to financial crisis of foreign company - However, assessee did not obtain permission from Reserve Bank of India for writing off claim - In view of said fact, ITO did not entertain assessee's claim and added sum to income of assessee - Commissioner (Appeals) as well as Tribunal, however, deleted addition - On instant reference, assessee contended that it had been maintaining its books of account on cash basis, and accordingly, amount receivable could be included in assessment when it was actually received - Whether, on aforesaid facts, matter should be remanded to Tribunal to decide method of accounting followed by assessee and on that basis, redetermine issue as regards taxability - Held, yes [ - Matter remanded] FACTS During the relevant year, the assessee-company was to receive professional fees from a foreign company. By a resolution, the assessee had purportedly forgone the said fees from the said foreign company due to continuous financial crisis of the company. The assessee did not obtain any permission from the Reserve Bank of India. In view of said fact, the ITO did not entertain the assessee's claim and added the sum to the income of the assessee. The Commissioner (Appeals) held that the question of taking permission from the Reserve Bank of India for writing off the professional fees receivable from the foreign company could not be a bar against allowance of the assessee's claim. He, therefore, directed the ITO not to include the above mentioned amount in the total income for the year under reference. The Tribunal upheld the finding of the Commissioner (Appeals). On reference, the assessee raised a plea the it had been maintaining its books of account on cash basis and, accordingly the amount receivable could be included in the assessment when it was actually received. HELD The question whether the assessee had changed the method of accounting and had been following the cash system so far as the technical fees receivable from the foreign company was concerned had to be decided by…

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