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TMI Blog1993 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... sessees are a firm of advocates. The assessees follow the cash system of accounting. In these cases, the Income-tax Officer found that the assessees were maintaining clients' accounts and there were huge credits in those accounts. The assessees used to receive in advance from the clients money towards expenses like stamp duty, registration fees, filing fees, etc., and the sums so received were credited to the parties' accounts. As and when expenses were incurred on behalf of each client, the sums so spent were debited to the client's account against the sums so received. After the case of the client is decided or the work of the client is over, the assessee prepares a bill and sends it to the client. The fees account is credited only when f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndhi and Co., the assessee in Income-tax Applications Nos. 196 and 197 of 1993, the Commissioner of Income-tax agreed with the view taken by the Income-tax Officer that the net accretion to the credit of the clients' account at the end of the last year should be considered as the income of the assessee. He, however, did not agree with the amount of net accretion and to that extent modified the order passed by the Income-tax Officer. The Tribunal in the case of D. C. Gandhi Associates held that no material was gathered by the Assessing Officer to show that the assessee was not adjusting the amounts in respect of litigation which ended before the close of the previous year and as the burden is on the Revenue to show that any receipt can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions to this court : Income-tax Application No. 161 of 1993 : "Whether the Appellate Tribunal is right in law and on facts in deleting the amount of Rs. 5,01,956 of the professional receipts which pertained to the year under consideration?" Income-tax Application No. 196 of 1993 : "1. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 7,32,363 to the total income of the assessee being the difference between the opening and closing balance of the clients' account, i.e., the amount representing the fees not transferred to fees account ? 2. Whether the Appellate Tribunal is right in law and on facts in restricting the addition to Rs. 42,770 from Rs. 1,86,196 as sustained by the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the method of accounting followed by the assessees was basically wrong. On the contrary, we find that the Bombay High Court in Manilal Kher Ambalal and Co. v. A. G. Lulla [1989] 176 ITR 253, considering a similar method of accounting, though by a firm of solicitors, has approved the said method of accounting on the ground that it is an accepted method of accounting so far as solicitors are concerned. In our opinion, the position of an advocate in this behalf is not very different from that of a solicitor and, therefore, even in the case of advocates such a method of accounting can be regarded as accepted method of accounting. As pointed out by the Commissioner of Income-tax and by the Tribunal in the other case, there is nothing to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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