Income tax calculation basis:recipt or accrual?
This query is : Resolved
02 December 2013
1Case: we have left to show interst income in yearly income & AO has ordered tax recovery on recipt basis of interest income instead of Accrual basis which is spread in length of 5 years. 2.hence appeal to CIT. 3.CIT has upheld the AO stands & income tax on interest income : on reciept basis & not on accrual basis( which is spread in the 5 years length), hence we have to pay more income tax on reciept basis than accrual basis & our appeal is dismissed. So it is advisable to go furhter in Apellate tribunalfor appeal? is there any chance in law that calculation of tax on accrual basis is considered in tribunal? pl guide.
Read more at: https://www.caclubindia.com/forum/income-tax-calculation-272820.asp#.UpyoedJQFds
Read more at: https://www.caclubindia.com/forum/income-tax-calculation-272820.asp#.UpyoedJQFds
02 December 2013
1 Case: we have left to show interest income in yearly income & AO has ordered tax recovery on receipt basis of interest income instead of Accrual basis which is spread in length of 5 years.
.
Please confirm at your end and clarify -
Whether you are very clear about the two methods of accounting ?
.
1. If you say "we have left to show interest income in yearly income" it indicates that though certain interest income has accrued but you have not shown it.
.
If you have followed mercantile method of accounting then you have no option to take the income on receipt basis.
.
Receipt basis, here, means when you really receive the interest either by cheque or in cash or in some kind.
.
Please note that you can not file both the methods. You have to choose either of the two i.e. Cash Basis or Receipt Basis.
.
.
Please confirm at your end and clarify -
Whether you are very clear about the two methods of accounting ?
.
1. If you say "we have left to show interest income in yearly income" it indicates that though certain interest income has accrued but you have not shown it.
.
If you have followed mercantile method of accounting then you have no option to take the income on receipt basis.
.
Receipt basis, here, means when you really receive the interest either by cheque or in cash or in some kind.
.
Please note that you can not file both the methods. You have to choose either of the two i.e. Cash Basis or Receipt Basis.
.
03 December 2013
I m very clear about the method of accounting my question is can we go for accrual basis we have received compensation on land acquisition by govt(L.Aq. in year 2001 & payment received in 2006-07)) which contains the principle + interest component for delayed payment.The interest spread over from 2001 to 2006 years.
since it is ignorance on our part we have not shown in IT return of 2006-07.
In order of IT dept they have considered whole Interest component as a receipt basis in yr 2006.
& our appeal to spread over from 2001 to 2006 dismissed.
what is next option?
Pl advise.
-shailesh? the details is as below:
since it is ignorance on our part we have not shown in IT return of 2006-07.
In order of IT dept they have considered whole Interest component as a receipt basis in yr 2006.
& our appeal to spread over from 2001 to 2006 dismissed.
what is next option?
Pl advise.
-shailesh? the details is as below:
03 December 2013
In the absence of insufficient details in the original query a general reply has been given.
.
I am very happy as you have taken the straight question so lightly and I am thankful to you for providing the relevant details of the case.
.
As per Section 145A, clause (b), interest in such a case is to be taken on receipt basis. You can not take it on accrual basis
due to this provision as well as due to the fact that you were not certain about the amount of interest being receivable from the Govt.
.
However, you can take 50% of the amount as deductible U/s 57(iv).
.
I am very happy as you have taken the straight question so lightly and I am thankful to you for providing the relevant details of the case.
.
As per Section 145A, clause (b), interest in such a case is to be taken on receipt basis. You can not take it on accrual basis
due to this provision as well as due to the fact that you were not certain about the amount of interest being receivable from the Govt.
.
However, you can take 50% of the amount as deductible U/s 57(iv).
03 December 2013
Since - section 145A by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :
& our case is pertains to year 2006-07 is there chance for non implementation of ACT.
pl advice.
& our case is pertains to year 2006-07 is there chance for non implementation of ACT.
pl advice.
03 December 2013
Of course, chances are there that the plea may be considered. In that case section 145(1) should be made the basis.
.
.
04 December 2013
Sir,
Thanks to providing me useful guidance.
So I am deciding to appeal in IT tribunal based on this 145A provision since appeal time limit ends on 31 december.
We will represent timing of event occurs & law at that time prevails.
I think we have only one point to represent.
If further help needed i will write u, sir.
Regards,
-shailesh patel
Thanks to providing me useful guidance.
So I am deciding to appeal in IT tribunal based on this 145A provision since appeal time limit ends on 31 december.
We will represent timing of event occurs & law at that time prevails.
I think we have only one point to represent.
If further help needed i will write u, sir.
Regards,
-shailesh patel
24 September 2014
Sir,
Now my appeal is pending in Tribunal ,The IT department has issued a notice u/s 154 to recover the demand else it will be recovered from salary/Bank account.
Now my appeal is pending in Tribunal ,The IT department has issued a notice u/s 154 to recover the demand else it will be recovered from salary/Bank account.
24 September 2014
Sir,
Now my appeal is pending in Tribunal ,The IT department has issued a notice u/s 154 to recover the demand else it will be recovered fro salary/Bank account.
Now my appeal is pending in Tribunal ,The IT department has issued a notice u/s 154 to recover the demand else it will be recovered fro salary/Bank account.
07 April 2016
The Matter is pending in ITAT for last 2 years and IO has turned down our plea and issued a order for penalty. Now what to do?File the appeal at CIT ? or depositing the amount? partial amount (50%)depositing allowed? Interest will be applied if delay in depositing? please guide urgently.
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