Dear Sir/Ma'am,
Kindly confirm Gross or Net Revenue should be disclosed in Profit and Loss Account as per Income Tax Act and Accounting Standards
Our company is under litigation and I need the exact section for quoting in my submission
Please advise
Income Tax Act or Accounting Standards that requires the disclosure of gross revenue in the Profit and Loss Account may vary depending on the circumstances of your company's litigation.
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Section 145 of the Income Tax Act, 1961: This section lays down the method of accounting to be followed for computing the taxable income. It requires that the income should be computed in accordance with the method of accounting regularly employed by the assessee, and that the method should be consistent from year to year. Therefore, if your company has been consistently disclosing gross revenue in its Profit and Loss Account, it would be required to continue doing so.
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Ind AS 18, Revenue: This standard provides guidance on the recognition and measurement of revenue in financial statements. It requires that revenue should be measured at the fair value of consideration received or receivable, and that the revenue should be disclosed on a gross basis unless certain conditions are met for net presentation. Therefore, if your company follows Ind AS, it would be required to disclose gross revenue in its Profit and Loss Account.
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