1978 (3) TMI 80

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....o the assessment year 1970-71. The accounting year ended on 31st December, 1969. The assessee is a company. It earned income from business and also from other sources and house property. In an earlier year, the assessee advanced a loan to the aforesaid party mentioned in the question. In 1967 the assessee passed a resolution deciding not to credit the interest on the aforesaid loan on due basis but to credit the same when realised. In terms of the said resolution the assessee did not enter the interest on the said loan in its books as they were not received by the assessee. In two earlier assessment years the Income-tax Officer brought the interest on the said loan to tax. The Tribunal confirmed those additions in the quantum appeals ....

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....nce reported in [1978] 112 ITR 575 (Cal)]. It has been held in this case that under section 291 of the Companies Act, 1956, the directors of a company can change the method of accounting and if they do so in good faith and the new method is regularly followed by the company in the subsequent years, the tax must be assessed on the basis of the new method of accounting. Mr. Bhattacharyya, therefore, urges that the instant case before us is covered by the aforesaid decision of this court. Mr. B. K. Bagchi, learned advocate for the revenue, argues, on the other hand, that the assessee cannot change the method of accounting unilaterally or in respect of a particular transaction as held by the Allahabad High Court in Shiv Prasad Ram Sahai v. C....

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....at the authorities below and also the learned counsel appearing before us have not properly appreciated the relevant facts and the circumstances of the accounting year relevant to the assessment year 1970-71 and the issue involved in it. In this accounting year, the assessee did not alter any method of accounting. It had already changed its method of accounting in an earlier accounting year. The aforesaid facts were overlooked by them and, therefore, neither the earlier orders of the Tribunal nor the aforesaid cases cited at the Bar can have any application to the facts and circumstances of the accounting year relevant to the assessment year 1970-71. Similarly, the other arguments noted earlier have no bearing on the issue involved in th....