2014 (11) TMI 480

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....g substantial questions of law:- ''(1) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the Hire Purchase Finance charges should be assessable to tax on Sum of Digits basis as against Equated Monthly Installments basis regularly followed by the appellant? (2) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest income accrued only in the Sum of Digits method and form part of the Mercantile system of accounting? (3) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the appellant is not entitled to maintain its book on the Sum of Digits method and offer the income on....

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....nvestments Trust Ltd. Income has accrued to the assessee as per the contracts entered into between the parties. Therefore the income will be assessable to tax on Sum of Digits basis. Since the decision of Special Bench is binding on all divisional benches of ITAT all over the country, we have to follow the decision of Special Bench and not by the Divisional Bench in the case of Ashok Leyland Finance Ltd., dated 28th February 2006. Respectfully following the order of Special Bench, we hold that ld CIT(A) was justified in confirming the stand taken by the Assessing Officer.'' Hence, the appellant-assessee is before us with these appeals. 3. The learned counsel for the appellant-assessee primarily relied on the decision of this C....

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....e three methods of accouting, namely, (i) cash or receipt basis; (ii) accrual or mercantile basis, and (iii) mixed or hybrid method which has elements of both the aforesaid methods. It was noticed that many assessees are following the hybrid method in a manner that does not reflect the correct income. The Finance Act, 1995 has amended section 145 of the Income Tax Act to provide that income chargeable under the head ''Profits and gains of business or profession'' or ''Income from other sources'' shall be computed only in accordance with either the cash or the mercantile system of accounting, regularly employed by an assessee. The first proviso to sub-section (1) of section 145 has been deleted. 44.2. The F....