2011 (10) TMI 26 - HC - Income Tax

Change in accounting method - mercantile system to cash system - The explanation given by the assessee was that there was always a gap between raising the debit note for commission and actual receipt of commission by cheque from the party. - held that - The ITAT has found that the explanation put forth by the assessee was acceptable and admittedly the cash system has been followed consistently thereafter. - no fault can be found with the decision of the ITAT.

Summary

The Bombay High Court upheld the decision of the ITAT regarding a change in accounting method from mercantile to cash system for AY 2005-06 by a commission agency in steel products business. The change was deemed bonafide due to a gap between raising debit notes and actual receipt of commission. The appeal was dismissed with no costs.