Change in accounting method upheld where the cash system was duly adopted and regularly followed for assessment purposes.

An assessee may change from the mercantile system to the cash system of accounting where the change is duly authorised, regularly followed, and not shown to be made for a mala fide purpose. Here, a board resolution confirmed by shareholders supported the alteration, and the Tribunal's factual findings were based on evidence and were not shown to be perverse. On that footing, the new accounting method was accepted for assessment, and the assessee was entitled to be assessed on the cash system.

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Issues: Whether the assessee was entitled to switch from the mercantile system to the cash system of accounting and be assessed on that basis.

Analysis: The assessee validly altered its accounting method by a board resolution confirmed by the shareholders, the new system was regularly followed, and there was no finding of mala fide motive. The Tribunal's conclusion was supported by evidence, and its findings were neither shown to be perverse nor based on no evidence. In these circumstances, the legal consequence of the change in accounting method was accepted for assessment purposes.

Conclusion: The assessee was entitled to be assessed on the cash system of accounting, and the question was answered in the affirmative in its favour.

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