9911796707
TMI Blog1998 (2) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The assessee is a company carrying on chitty business. In the course of the assessment proceedings for the asst. yr. 1987-88 the AO found that there was a balance of Rs. 51,724 in respect of the terminated kuri which had not been taken to the P L a/c. In the previous year relevant to the asst. yr. 1988-89 there were three terminated kuries and the balance of those accounts amounting to Rs. 2,48,785 was also not brought to the P L a/c. For the asst. yr. 1991-92 there was in the same manner a total of Rs. 3,50,211 as the balance in the accounts of three terminated kuries not brought to the P L a/c. The balance in the current account represented the fixed discount and auction discount which were being postponed by the assessee for accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered as income to the extent of dues realised from the defaulters until the entire dues were collected. It was stated that the assessee was consistently following the same method of accounting the profit in kuri account and so the AO was not justified in disturbing that method to make the impugned additions. The learned representative of the assessee added that this method of accounting the profit from terminated kuries on actual realisation basis had been approved by this Tribunal in the case of Popular Kurie Ltd., Trichur in ITA No. 697/Coch/87, dt. 21st Oct., 1992. It was also pointed out that a reference application against that decision was dismissed by the High Court in CIT vs. Popular Kuries Ltd. (1995) 214 ITR 38 (Ker). Anto also r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be accounted latter, according to their convenience on actual realisation from the defaulters. Kuruvilla submitted that being a company, the assessee had to maintain its accounts on mercantile basis and in accordance with the mercantile system of accounting, the income from kuries was to be accounted on accrual basis rather than waiting for actual realisation on a subsequent date. The learned Departmental Representative submitted that the Revenue authorities were, therefore, justified in bringing to tax the entire profit from the kuri business on accrual basis at the time of termination of the kuries. 5. We have given due consideration to the submission on both sides and gone through the facts brought on record. It is not disputed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant to take its profit the forfeited dividends payable on kuries whether in respect of prized subscribers or in respect of non-prized subscribers driving the assessee to claim as bad debt the amount not covered in the subsequent years." 6. The Tribunal further noticed that when the assessee was following a particular method of accounting the income from kuries, it is not for the Revenue to substitute its own method of accounting because that method was more palatable. In the case of Trichur Kuri Syndicate, cited supra, also the Tribunal has taken the same view regarding the assessment of the profits from terminated kuries. We take note of the fact that reference application filed by the Revenue against both the above decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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