https://www.taxtmi.com/caselaws?id=377047 The Madras High Court upheld the Tribunal's decision that the Internal Rate Return (IRR) method is appropriate for income recognition in hire purchase transactions, rejecting the Equated Sum (ESM) method used by the Appellant. The Court emphasized that income recognition should align with the nature of the transaction. Additionally, the Court supported the computation of interest income under the IRR method based on the EMI method, emphasizing the importance of reflecting principal and interest components in hire purchase agreements. The Assessee was allowed to maintain books on the IRR method while offering income on the ESM method for tax purposes, in accordance with past practices. en-us Tue, 05 Mar 2019 00:00:00 +0530 Thu, 09 May 2019 17:00:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=377047 The Madras High Court upheld the Tribunal's decision that the Internal Rate Return (IRR) method is appropriate for income recognition in hire purchase transactions, rejecting the Equated Sum (ESM) method used by the Appellant. The Court emphasized that income recognition should align with the nature of the transaction. Additionally, the Court supported the computation of interest income under the IRR method based on the EMI method, emphasizing the importance of reflecting principal and interest components in hire purchase agreements. The Assessee was allowed to maintain books on the IRR method while offering income on the ESM method for tax purposes, in accordance with past practices. Case-Laws Income Tax Tue, 05 Mar 2019 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=377047