TaxTMI 
TaxTMI 
2009 (11) TMI 11
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....cumstances of the case, the Tribunal was right in law in holding that overdue charges on accrual basis not accounted the books of account is not to be brought to tax? (ii) Whether on the facts and circumstances of the case, the Tribunal was right in holding that the additional financial charges (overdue charges) are not to be added as income of the assessee?" 2. The facts, as culled out from the memorandum of grounds, are as follows: During the previous year ended on 31.3.1997, the assessee Company had admitted overdue financial charges on hire purchase and lease transactions on cash basis i.e. on receipt basis and not on accrual basis. In the course of the assessment proceedings, the assessee Company was informed th....
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....is presupposes the satisfaction of two conditions viz. the revenue is measurable and that the revenue is collectable without any uncertainty. Taking into account these standards also, the assessee submitted that the overdue on financial charges on hire purchase and lease had been admitted only on cash basis. Rejecting the said submission, the Assessing Officer passed the assessment order. 6. Aggrieved by the same, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), who dismissed the appeal, upholding the finding of the Assessing Officer. The Assessee preferred a further appeal before the Income-tax Appellate Tribunal and the Tribunal allowed the appeal of the assessee, following the judgm....
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....e and tax evasion, while dealing with the validity of the change in the method of valuation, change in accordance with the accounting practice and change followed in subsequent years. The general principles are : "(i) the distinction between tax evasion and tax avoidance is still prevalent. (ii) generally speaking, tax evasion is the result of such things as illegality, suppression, misrepresentation and fraud. (iii) tax avoidance is the result of actions taken by the assessee, none of which is illegal or forbidden by the law in itself and no combination of which is similarly forbidden or prohibited. (iv) the permissibility of a tax avoidance, will fall to be decided, when and only when, on the basis of the facts and....
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.... (I.) Ltd. (2003)263 ITR 227 (Bom) and (ii) Hela Holdings Pvt. Ltd. v. CIT (2003) 263 ITR 129 (Cal), the Revenue suffered any loss or such a change of methodology attracts tax evasion. Concededly, there is no finding to that effect in the assessment order or in the order of the Commissioner of Income-tax (Appeals). The change of method of accounting of overdue charges from the mercantile basis to cash system, method of accounting, as followed by an assessee, does not create any income; but the method of accounting only recognizes income. Therefore, either to apply the accrual system or cash system, recognition of income is a paramount factor. In the present case, the disputed amount is the overdue charges receivable `by....