1989 (5) TMI 15

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.... year 1974-75 ? (2) Whether, on the facts and in the circumstances of the case, the amount of Rs. 5,30,476 being the gratuity calculated on the basis of actuarial valuation was, when no provision for gratuity was made in the books of the assessee for the year under consideration, deductible in the computation of the total income of the assessee for the year ?" Shortly stated, the facts are that, under the First Industrial Tribunal Award, 1958, the assessee was under the statutory obligation to make the payment to its clerical employees and others by way of casual leave payment. It is also an admitted position that, in the years prior to the year under consideration, the assessee was following a hybrid system of accounting. It was foll....

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....e Tribunal, the change of the method was not bona fide. The Tribunal, therefore affirmed the order of the Commissioner of Income-tax (Appeals). The correctness of this view is at issue before us. The choice of the method of his accounting lies with the assessee. It is open to the assessee to follow one system of accounting in respect of one source and another system in respect of another source. It is also open to an assessee to change his method of accounting regularly employed by him. The change should be bona fide and not a casual departure from the regular method which has hitherto been accepted by him for a number of years. Merely because in the subsequent assessment year, there was a loss and the bonus actually paid in that year could....