This document discusses the applicability of accounting standards to the Income Tax Act of 1961 in India. It outlines the various statutory provisions and accounting standard authorities, as well as key judicial pronouncements that have established that accounting standards must be followed and applied when determining taxable income, even if the standards have not been directly notified under the Income Tax Act. However, some differences still exist between accounting and tax treatments in certain areas such as inventory valuation, prior period adjustments, and impairment of assets. Overall convergence of the Income Tax Act and accounting standards continues to progress in India.
Process Flow for GST Refunds as per CGST Act and Rules as on 7 Sep 2017. Please note that this is for guidance purposes only, and holds no legal validity.
A brief on recent changes in GST post 22nd and 23rd meetings of the GST Council. Please note that this is purely for educational/guidance purposes, and holds no legal validity
Major Announcements by GST Council in 31st Meeting on 22th DecCA PRADEEP GOYAL
All in one document
Seven Press Releases issued by CBIC pursuant to the
31st meeting of the GST Council on 22nd December,
2018
• Major Announcements with regards to rates,
returns, refunds, composition scheme etc made
CAG brings out deficiencies in the functioning of chartered accountants in S ...D Murali ☆
CAG brings out deficiencies in the functioning of chartered accountants in S 44AB audit - T. N. Pandey - Article published in Business Advisor, dated January 25, 2015 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
Process Flow for GST Refunds as per CGST Act and Rules as on 7 Sep 2017. Please note that this is for guidance purposes only, and holds no legal validity.
A brief on recent changes in GST post 22nd and 23rd meetings of the GST Council. Please note that this is purely for educational/guidance purposes, and holds no legal validity
Major Announcements by GST Council in 31st Meeting on 22th DecCA PRADEEP GOYAL
All in one document
Seven Press Releases issued by CBIC pursuant to the
31st meeting of the GST Council on 22nd December,
2018
• Major Announcements with regards to rates,
returns, refunds, composition scheme etc made
CAG brings out deficiencies in the functioning of chartered accountants in S ...D Murali ☆
CAG brings out deficiencies in the functioning of chartered accountants in S 44AB audit - T. N. Pandey - Article published in Business Advisor, dated January 25, 2015 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
Tax Practice Manual is an exhaustive (2,100+ pages), amended (by the Finance Act, 2021) & practical guide (330+ case studies) for Tax Professionals.
This book will be helpful for the Chartered Accountants, Lawyers/Advocates, Tax Practitioners to assist them in their day-to-day tax works.
This book is divided into two parts:
• Law Relating to Tax Procedures (covering 25+ topics)
• Case Studies (covering 35+ topics)
The Present Publication is the 7th Edition, authored by Gabhawala & Gabhawala, as amended by the Finance Act 2021, with the following noteworthy features:
• Law Relating to Tax Procedures
◦ [Lucid Explanation, in a Practical Manner, with Checklists & necessary Tips] for the law relating to Tax Procedure
◦ [Exhaustive Coverage of Case Laws]
◦ [Fine Prints & Unwritten Lines] are explained in a lucid manner
• Tax Practice
◦ [Elaborated & Threadbare Analysis] of every aspect of Tax Practice
• Case Studies
◦ [330+ Case Studies] to deal with real-life animated situations/problems faced by tax practitioners
• Draft Replies
◦ For the Notices sent by the Department
◦ Petitions to the Department
• Drafting & Conveyancing
◦ [Complete Guide to Drafting of Deeds & Documents] covering
◦ Affidavits
◦ Wills
◦ Special Business Arrangements
◦ Family Arrangements
◦ Power of Attorney
◦ Lease, Rent & Leave and Licenses
◦ Indemnity and Guarantee
◦ Charitable Trust Deeds, etc.
The contents of this book are as follows:
• Law Relating to Tax Procedures
◦ Tax Practice
◦ Pre-assessment Procedures
◦ Assessment
◦ Appeals
◦ Interest, Fees, Penalty and Prosecution
◦ Refunds
◦ Settlement Commission – ITSC, Interim Board for Settlement
◦ Summons, Survey, Search
◦ TDS and TCS
◦ Recovery of Tax
◦ Special Procedures
◦ Approvals
◦ STT, DDT, Tax on Liquidation, Reduction and Buy Back, MAT, AMT and WT
RTI, Ombudsman
◦ Drafting of Deeds
◦ Agreement, MoU
◦ Gifts, Wills, Family Arrangements
◦ Power of Attorney, etc.
◦ Lease, Rent, License, etc.
◦ Sale/Transfer of Properties
◦ Tax Audit
◦ Income Computation & Disclosure Standards
◦ Real Estate (Regulation and Development) Act, 2016 (RERA)
◦ E-Proceedings under the Income Tax Act, 1961
◦ Prohibition of Benami Property Transactions Act, 1988
• Case Studies
◦ Tax Practice
◦ Pre-Assessment Procedures
◦ Assessment – Principles and Issues
◦ Rectification of Mistake
◦ Revision
◦ Appeals to CIT (Appeals)
◦ Appeals to – ITAT – High Court – Supreme Court
◦ Interest Payable by Assessee
◦ Penalties
◦ Prosecution
◦ Refunds
◦ Settlement of Cases
◦ Survey
◦ Search & Seizure
◦ Tax Deduction at Source
◦ Recovery of Tax
◦ Trust, Mutuality, Charity
◦ Firm
◦ LLP – Limited Liability Partnership
◦ Right to Information – RTI
◦ Agreement, MoU
◦ AOP – Association of Persons
◦ HUF – Hindu Undivided Family
◦ Gifts
◦ Wills
◦ Family Arrangements
◦ Power of Attorney
◦ Indemnity and Guarantee
◦ Lease, Rent, Leave and License
◦ Sale/Transfer of Properties
◦ Tax Audit
Case laws update - V. K. Subramani - Article published in Business Advisor, dated September 25, 2016 - http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
Presentation on GST Transitional Credits - Disputes & Way ForwardTaxmann
Topics Covered in this Presentation:
1. Background of Transitional provisions
A. Different circumstances under Section 140
2. Practical Issues
A. Judgments on Transitional Credits
B. Deemed Credit
3. Impact of transitional provisions amendment
E book GST Transitional Credits - Disputes & Way ForwardTaxmann
CONTENTS
1. Background of Transitional Provision
2. Practical issues faced in transitional provisions
a) Problems due to the automation process Other reasons
3. The issues in transitional credit can be summarized
as follows:
a) Applicable to all sub-sections (1) to (8) of Section 140.
b) Section 140(1) & (2) – Transfer of closing balance of credit
4.Impact of retrospective amendment in explanation 11
1, 2, and 3 of Section 140.
Union Budget 2014 is an earnest commencement to the economic agenda laid down by the government signifying the intent of kick starting capital spending both in public & private sector.
It is heartening to see the budget in pursuit of fiscal prudence with a focused objective to simplify tax administration in order to advance the ease of doing business.
BDO India LLP brings an overview of key changes from a tax and regulatory perspective and its impact on the economic trajectory.
Direct Tax Amendments Applicable From 1st April 2017Amarpal Jakhar
As Financial Year is ending, tax proposals in the Budget 2017 have now become law. This Budget focused on rewarding honest taxpayers, taxing the rich and bringing to task economic offenders. Here we are listing some of the major changes in direct taxation that would apply from April 2017.
Tax Practice Manual is an exhaustive (2,100+ pages), amended (by the Finance Act, 2021) & practical guide (330+ case studies) for Tax Professionals.
This book will be helpful for the Chartered Accountants, Lawyers/Advocates, Tax Practitioners to assist them in their day-to-day tax works.
This book is divided into two parts:
• Law Relating to Tax Procedures (covering 25+ topics)
• Case Studies (covering 35+ topics)
The Present Publication is the 7th Edition, authored by Gabhawala & Gabhawala, as amended by the Finance Act 2021, with the following noteworthy features:
• Law Relating to Tax Procedures
◦ [Lucid Explanation, in a Practical Manner, with Checklists & necessary Tips] for the law relating to Tax Procedure
◦ [Exhaustive Coverage of Case Laws]
◦ [Fine Prints & Unwritten Lines] are explained in a lucid manner
• Tax Practice
◦ [Elaborated & Threadbare Analysis] of every aspect of Tax Practice
• Case Studies
◦ [330+ Case Studies] to deal with real-life animated situations/problems faced by tax practitioners
• Draft Replies
◦ For the Notices sent by the Department
◦ Petitions to the Department
• Drafting & Conveyancing
◦ [Complete Guide to Drafting of Deeds & Documents] covering
◦ Affidavits
◦ Wills
◦ Special Business Arrangements
◦ Family Arrangements
◦ Power of Attorney
◦ Lease, Rent & Leave and Licenses
◦ Indemnity and Guarantee
◦ Charitable Trust Deeds, etc.
The contents of this book are as follows:
• Law Relating to Tax Procedures
◦ Tax Practice
◦ Pre-assessment Procedures
◦ Assessment
◦ Appeals
◦ Interest, Fees, Penalty and Prosecution
◦ Refunds
◦ Settlement Commission – ITSC, Interim Board for Settlement
◦ Summons, Survey, Search
◦ TDS and TCS
◦ Recovery of Tax
◦ Special Procedures
◦ Approvals
◦ STT, DDT, Tax on Liquidation, Reduction and Buy Back, MAT, AMT and WT
RTI, Ombudsman
◦ Drafting of Deeds
◦ Agreement, MoU
◦ Gifts, Wills, Family Arrangements
◦ Power of Attorney, etc.
◦ Lease, Rent, License, etc.
◦ Sale/Transfer of Properties
◦ Tax Audit
◦ Income Computation & Disclosure Standards
◦ Real Estate (Regulation and Development) Act, 2016 (RERA)
◦ E-Proceedings under the Income Tax Act, 1961
◦ Prohibition of Benami Property Transactions Act, 1988
• Case Studies
◦ Tax Practice
◦ Pre-Assessment Procedures
◦ Assessment – Principles and Issues
◦ Rectification of Mistake
◦ Revision
◦ Appeals to CIT (Appeals)
◦ Appeals to – ITAT – High Court – Supreme Court
◦ Interest Payable by Assessee
◦ Penalties
◦ Prosecution
◦ Refunds
◦ Settlement of Cases
◦ Survey
◦ Search & Seizure
◦ Tax Deduction at Source
◦ Recovery of Tax
◦ Trust, Mutuality, Charity
◦ Firm
◦ LLP – Limited Liability Partnership
◦ Right to Information – RTI
◦ Agreement, MoU
◦ AOP – Association of Persons
◦ HUF – Hindu Undivided Family
◦ Gifts
◦ Wills
◦ Family Arrangements
◦ Power of Attorney
◦ Indemnity and Guarantee
◦ Lease, Rent, Leave and License
◦ Sale/Transfer of Properties
◦ Tax Audit
Case laws update - V. K. Subramani - Article published in Business Advisor, dated September 25, 2016 - http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
Presentation on GST Transitional Credits - Disputes & Way ForwardTaxmann
Topics Covered in this Presentation:
1. Background of Transitional provisions
A. Different circumstances under Section 140
2. Practical Issues
A. Judgments on Transitional Credits
B. Deemed Credit
3. Impact of transitional provisions amendment
E book GST Transitional Credits - Disputes & Way ForwardTaxmann
CONTENTS
1. Background of Transitional Provision
2. Practical issues faced in transitional provisions
a) Problems due to the automation process Other reasons
3. The issues in transitional credit can be summarized
as follows:
a) Applicable to all sub-sections (1) to (8) of Section 140.
b) Section 140(1) & (2) – Transfer of closing balance of credit
4.Impact of retrospective amendment in explanation 11
1, 2, and 3 of Section 140.
Union Budget 2014 is an earnest commencement to the economic agenda laid down by the government signifying the intent of kick starting capital spending both in public & private sector.
It is heartening to see the budget in pursuit of fiscal prudence with a focused objective to simplify tax administration in order to advance the ease of doing business.
BDO India LLP brings an overview of key changes from a tax and regulatory perspective and its impact on the economic trajectory.
Direct Tax Amendments Applicable From 1st April 2017Amarpal Jakhar
As Financial Year is ending, tax proposals in the Budget 2017 have now become law. This Budget focused on rewarding honest taxpayers, taxing the rich and bringing to task economic offenders. Here we are listing some of the major changes in direct taxation that would apply from April 2017.
MAKE IN INDIA | DIVYANSH AGRAWAL, www.facebook.com/divyansh.in Divyansh Agrawal
Challenges For Make In India, What is Make in India ?, Overview Of Make In India, Foreign Direct Investment, Advantages Of Make In India , Disadvantages Of Make In India , Response For Make In India ,
This presentation is pertaining to the make in India intitative which had took since few months ago,I given brief information about the event,Its probable contribution to GDP,FDI & Export promotion in the country.
this latest edition of out quarterly publication summarizes SEC developments in the last quarter. Highlights include SEC staff guidance on tax reform, remarks by SEC Chairman Jay Clayton and members of the SEC staff at the recent AICPA Conference on Current SEC and PCAOB Developments on the new accounting standards, critical audit matters and cybersecurity, and a discussion of Mr. Clayton’s concerns about initial coin offerings. We also discuss recent SEC rulemaking activities, SEC staff guidance updates and significant personnel changes.
Revised ICDS ppt - CIRC Noida Branch by CA Parul Mittalparul mittal
With effect from April 01, 2016, Income Computation and Disclosure Standards have become effective on Indian Taxpayer. Hence, it is important to understand the concept of standards, the recognition principles, disclosure requirements and transitional provisions. This presentation explains the basic structure of ICDS and contains the explanations issued by CBDT in March 2017.
White paper income computation & disclosure standardsRSM India
White Paper on ‘Income Computation and Disclosure Standards’ by RSM Astute Consulting The Central Government within the powers conferred upon it under the Income-tax Act, have notified 10 Income Computation and Disclosure Standards’ dated 31 Mar '15 to be followed for computing income for tax purposes. This is likely to create a substantial impact in the approach & methodology of computing & offering income to Income-tax. Our white paper discusses the need & objective of ICDS, applicability to entities & period, material tax outlays, significant aspects & its implications, open issues, etc
Similar to Applicability of accounting standards to income tax act (20)
S&A Knowledge Series - General Insurance AdvisoryDhruv Seth
Highlighting our varied reach of business operations we share with you some key points which should be kept in mind while taking a general insurance policy. These would not only help you lower your premium but would also help in having ease in the claim in case of any adversary.
S&A Knowledge Series - Cash disallowances under Income TaxDhruv Seth
Attached is the compilation of the various prohibitions under the Income Tax Act which pertain to cash transactions. Please ensure your books comply with this to avoid penal consequences.
Our team has compiled the various sections applicable in Income Tax which are applicable to the Real Estate sector. Synopsis of the sections and a brief understanding is attached for your perusal.
S&A Knowledge Series - GST on goods transport agencyDhruv Seth
Happy to share the first update on GST on Goods Transport Agency. This impacts all of us since the tax under GTA is payable by us on the reverse charge basis.
Please note this is not a very detailed writeup covering every aspect of the law. This is for basic general reading and presents a broad outline. If you have any specific query then please feel free to reach out to us for a solution.
S&A Knowledge Series - Company fresh start scheme 2020Dhruv Seth
The Ministry of Corporate Affairs has come out with a great scheme of regularising any defaults under the Companies Act and LLP Act. If you have any Company or an LLP which has been defaulting due to any reason can avail this scheme and regularise it. They have waived off any additional filing fee or prosecution under the relevant law (if not initiated).
A writeup on the schemes is attached detailing the applicability and other broad contours.
S&A Knowledge Series - Sec 50C implications under income tax actDhruv Seth
Please find attached a writeup on Sec 50C of the Income Tax Act, 1961 with the latest amendments of the Finance Act 2020.
Sec 50C deals with the deemed income under the Income Tax Act in case of the difference between actual sale value and the defined circle rate value. This section applies only to capital gains and not to business assets such as closing stock.
S&A Knowledge Series - Budget & budgetary controlsDhruv Seth
In continuation of our knowledge series please find attached an update on "Budgets and Budgetary Controls".
In light of the current humanitarian and possible economic turmoil, it becomes imperative for us to have an effective budget and controls for the same. This would ensure we stick to our expenses envisaged at the start of the year and exercise great control over our costs.
S&A Knowledge Series - Important Disallowances under sec 40A income taxDhruv Seth
Please find attached a writeup on disallowances under Sec 40A of the Income Tax Act.
Under this section two of the most violated provisions of the law have been explained in simple terms for easy reading. We believe this would help you with tertiary knowledge to avoid making these common errors.
Transactions with related parties.
Cash Transactions.
S&A Knowledge Series - Reduced rate of tax under income taxDhruv Seth
With the recent changes in the taxation rates of Companies, we are attaching a tabular presentation of the same for easier reading and understanding.
This would enable you to decipher which option might be more beneficial for you to lower your tax outgo. Please note these clauses only applies to Companies and not to other forms of businesses.
We are excited to share our annual Clients Circular on the amendments by Finance Act 2020.
The writeup covers important amendments that impact you directly and consciously we have avoided to mention the amendments which are procedural in nature. This writeup we believe would help you in complying with the law during the new financial year now underway.
Do get back to us if you have any questions and we would be delighted to help you out.
S&A knowledge series - Financial assistance to startupDhruv Seth
We are delighted to share with you a few of the new schemes which have been pronounced by financial institutions in the wake of COVID-19. While few are applicable to eligible startups the others can be availed by general MSMEs subject to conditions.
SIDBI COVID-19 Startup Assistance Scheme
ISBA Centre for Augmenting WAR with COVID-19 Health Crisis
S&A knowledge series - Financial assistance to MSMEDhruv Seth
SIDBI Assistance to Facilitate Emergency response against coronavirus
SIDBI Assistance to Facilitate Emergency response against coronavirus Plus
Technology Development Board- Proposal for Fighting Covid-19
The fascinating world of cryptocurrency. How will it impact you, the accountants, the regulators and the taxman? An insight into the world with special emphasis in Indian context
Your guide on the most crucial pillar of GST - Input Tax Credit.
We hope this guide can help you understand the contours of Input Tax credit with regard what you are eligible for and what is explicitly denied in the law.
Military Commissions details LtCol Thomas Jasper as Detailed Defense CounselThomas (Tom) Jasper
Military Commissions Trial Judiciary, Guantanamo Bay, Cuba. Notice of the Chief Defense Counsel's detailing of LtCol Thomas F. Jasper, Jr. USMC, as Detailed Defense Counsel for Abd Al Hadi Al-Iraqi on 6 August 2014 in the case of United States v. Hadi al Iraqi (10026)
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These slides helps the student of international law to understand what is the nature of international law? and how international law was originated and developed?.
The slides was well structured along with the highlighted points for better understanding .
A "File Trademark" is a legal term referring to the registration of a unique symbol, logo, or name used to identify and distinguish products or services. This process provides legal protection, granting exclusive rights to the trademark owner, and helps prevent unauthorized use by competitors.
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Responsibilities of the office bearers while registering multi-state cooperat...Finlaw Consultancy Pvt Ltd
Introduction-
The process of register multi-state cooperative society in India is governed by the Multi-State Co-operative Societies Act, 2002. This process requires the office bearers to undertake several crucial responsibilities to ensure compliance with legal and regulatory frameworks. The key office bearers typically include the President, Secretary, and Treasurer, along with other elected members of the managing committee. Their responsibilities encompass administrative, legal, and financial duties essential for the successful registration and operation of the society.
Synopsis On Annual General Meeting/Extra Ordinary General Meeting With Ordinary And Special Businesses And Ordinary And Special Resolutions with Companies (Postal Ballot) Regulations, 2018
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
4. Accounting Standard Authorities
• Accounting Standards issued by erstwhile National
Advisory Committee on Accounting Standards
(NFRA under Companies Act, 2013)
• Accounting Standards issued by ICAI.
• Tax Accounting Standards (TAS) proposed by
Accounting Standard Committee
• Powers to Central Government U/s 145(2) of the IT
Act, 1961 (NAS-1 and NAS-2 vis-a-viz AS1 and AS5)
• International Financial Reporting Standards in India
(Ind AS)
5. J.K. Industries Ltd. v. Union of India
[2008] 297 ITR 176 (SC)
Accounting Standards help in –
• Codification of Accounting rules
• Application of the fundamental rules
• Reduce the subjectivity
• Arrive at best possible estimate
• Reduces the need for tax laws dependency
upon artificial rules
6. Sec 133 of Companies Act, 2013
(Sec 211(3C) of the erstwhile act)
133. Central government to prescribe accounting
standards
The Central Government may prescribe
the standards of accounting or any addendum
thereto, as recommended by the Institute of
Chartered Accountants of India, constituted under
section 3 of the Chartered Accountants Act, 1949
(38 of 1949), in consultation with and after
examination of the recommendations made by the
National Financial Reporting Authority.
7. Sec 44AA of the IT Act, 1961
(2) Every person carrying on business or
profession [not being a profession referred to in
sub-section (1)] shall –
(i.) ……
(ii) …...
(iii) …..
(iv) …..
keep and maintain such books of account and
other documents as may enable
the 52[Assessing] Officer to compute his total
income in accordance with the provisions of
this Act.
8. Sec 145 of the IT Act, 1961
Method of accounting.
145. (1) Income chargeable under the head "Profits and gains
of business or profession" or "Income from other sources"
shall, subject to the provisions of sub-section (2), be computed
in accordance with either cash or mercantile system of
accounting regularly employed by the assessee.
(2) The Central Government may notify in the Official
Gazette57 from time to time accounting standards to be
followed by any class of assessees or in respect of any class of
income.
(3) Where the Assessing Officer is not satisfied about the
correctness or completeness of the accounts of the assessee,
or where the method of accounting provided in sub-section
(1) or accounting standards as notified under sub-section (2),
have not been regularly followed by the assessee, the
Assessing Officer may make an assessment in the manner
provided in section 144.]
9. Notification No. SO 69(E), dated 25-1-
1996 for Notified Accounting Standards
• Accounting Standard I relating to
disclosure of accounting policies
• Accounting standard II relating to
disclosure of prior period and
extraordinary items and changes in
accounting policies
11. Challapalli Sugars Ltd. v. CIT
[1975] 98 ITR 167
Supreme Court
". . . As the expression ‘actual cost’ has not
been defined, it should, in our opinion, be
construed in the sense which no commercial
man would misunderstand. For this purpose
it would be necessary to ascertain the
connotation of the above expression in
accordance with the normal rules of
accountancy prevailing in commerce and
industry. . . ."
12. [2003] 130 TAXMAN 179 (SC)
Commissioner of Income-tax v.
Indo Nippon Chemicals Co. Ltd.
". . . The High Court took the view that unless the
Assessing Officer acted under circumstances indicated
in section 145 of the Act, the Assessing Officer is bound
to adopt the method of computation of income
regularly employed by the assessee. However, if he
comes to the conclusion that the method of accounting
employed by the assessee makes it impossible to
correctly compute the income, then the Assessing
Officer is entitled to adopt any other suitable
accounting method. We may add that, whatever
method the Assessing Officer adopts, the method
has to be consistent with the accepted principles of
accountancy.. . . ."
13. Commissioner of Income-tax
v.
Woodward Governor India (P.) Ltd.
[2007] 294 ITR 451 (DELHI)
Section 5, read with section 145, of the Income-tax Act,
1961 - Income - Accrual of - Whether in determining
whether there has, in fact, been accrual of liability or
income, accountancy standards prescribed by ICAI would
have to be followed and applied ?
The judicially accepted position appeared to be that in
determining whether there has, in fact, been accrual of
liability or income, the accountancy standards prescribed by
the ICAI would have to be followed and applied. [Para 16]
14. Prakash Leasing Ltd.
v.
Deputy Commissioner of Income-tax
[2012] 23 taxmann.com 3 (Kar.)
“When the Accounting Standard is now made the basis of
maintaining the accounts for the purpose of income-tax,
even if the Central Government has not notified in the
Official Gazette the Accounting Standards, certainly
the Accounting Standards prescribed by the Institute of
Chartered Accountants have to be followed.”
15. CIT v. Virtual Soft Systems Ltd.
205 Taxman 257 (Delhi) [2012]
observed that "the guidance notes reflect the
best practices adopted by accountants the
world over" and further, that "as long as
there was a disclosure of the change in the
accounting policy in the accounts which had
a backing of a professional body such as ICAI,
it could not be discarded by the A.O."
16. [2013] 36 taxmann.com 74 (Mumbai - Trib.)
ACIT, Range -10(1) v.
ITD Cementation India Ltd
“It is a fact that AS-7 has not been notified by the Central
Government. This does not mean that the assessee is
precluded from following AS-7. A perusal of the
provisions of section 145 show that accounting standards
which have been notified by the Central Government have
to be mandatorily followed by the assessee. But this does
not mean that the assessee cannot follow the other
accounting standards issued by ICAI. The accounting
standards issued by ICAI cannot be brushed aside lightly.
On the contrary, if an assessee is following the
accounting standards issued by ICAI, it would give
more credibility and authenticity to its account.”
18. AS-2 (Inventory)
• IT gives more weightage to consistency
while AS more to correct representation
AS-4 (Contingencies)
• AS requires provision. SC - expenditure
dependent upon the future events is not
allowable as deduction
AS-4 (Prior Period)
• Difference in appreciating what actually
qualifies as a prior period item
19. AS-6; AS-10; AS-16
• Concept of Block of Asset
• Deferred Revenue Expenses (AS-26) vis-
a-viz Sec 35AB; 35ABB; 35D; 35DD; 35E
• Interest on Temporary Investment
• Only WDV under IT Act, 1961
AS-7
• Warranties and Contingences
• Retention Money
20. AS-9 (Revenue Recognition)
• Interest accrual a major grey area for
NBFC and banks.
• Export incentives
AS-11 (Foreign Exchange) v. Sec 43A
• Exchange fluctuation is to be adjusted in
cost of assets only on payment basis,
whereas for accounting purpose, the
entire outstanding liability is adjusted.
21. AS-13 (Investments)
• Permanent diminution to written off as
per AS. Not allowed under IT
AS-26 (Intangibles)
• Non Compete fees for AS-26 is intangible
and debatable in IT Act.
AS-28 (Impairment of Asset)
• Mandatory to apply AS-28 though
provision not allowable under IT Act.
Editor's Notes
the Hon’able Apex Court in the case of Apollo Tyres Ltd. v. CIT [(2002) 255 ITR 273] has held that the A. O., while computing the profits u/s 115J, does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Sec.
115J, if the same are in accordance with the provisions of the Parts II and III of Schedule VI to the Companies Act, as contemplated in Sec. 115J(1A)
A perusal of section 145 shows that the income could be computed “in accordance with the method of accounting regularly employed by the assessee”. It is undoubtedly correct that the statute stipulates that the income shall be computed on the basis of the system of accounting ‘regularly’ followed by the assessee. It should mean during the period under consideration. However, the provision cannot be interpreted to mean that once a system of accounting is adopted, it can never be changed. ‘Regular’ cannot be in the present context mean permanent - CIT v. Punjab State Industrial Development Corpn. Ltd. [2002] 255 ITR 351 (Punj. & Har.).