2002 (7) TMI 88 - HC - Income Tax

Mixed Accounting System Law Applicable - (1) Whether on the facts and in the circumstances of the case the Tribunal was right in law in its view that the assessee could follow the cash system of accounting in respect of interest income and continue to follow the mercantile system of accounting in respect of interest expenditure? - (2) Whether on the facts and in the circumstances of the case the Tribunal was right in law in deleting the additions of Rs.44, 90, 434 and Rs.25, 44, 968 for the assessment years 1987-88 and 1988-89 respectively? - both the questions are answered in the affirmative and in favour of the assessee.

Summary

The High Court of Calcutta ruled that the assessee could use a mixed accounting system for interest income and expenditure. The Tribunal was correct in deleting the additions for the assessment years 1987-88 and 1988-89. The Court found that mixed accounts were permissible and did not hinder the accurate assessment of profits. Both questions were answered in favor of the assessee.