BANK LOCKER RENT METHOD OF ACCOUNTING

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P V RAMA KRISHNA (Querist)
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21 July 2011 BANK LOCKERS RENTS ARE NORMALLY ACCOUNTED FOR ON CASH BASIS; WHETHER ANY PROVISION IS THERE IN INCOME TAX THAT LOCKER RENTS SHOULD BE ACCOUNTED FOR ON ACCRUAL BASIS.

RK
VIDARBHAPURI

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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21 July 2011 Locker rent is accounted for on cash basis as whenever it becomes due it is recovered by bankers from your Bank Account.

Whatever method you adopt follow it consistently.

Expenses admissible only when such expenditure is incurred in connection with the business of the assessee.

P V RAMA KRISHNA

P V RAMA KRISHNA (Querist)
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21 July 2011 Paras Bafna Sir, my question is on behalf of Banker; A co-operative urban bank is following Cash Basis for Locker Rental Incme, whereas, the A.O. during scrutiny proceedings adopted Accrual Basis and taxed heavily. pl. clarify Bafna Sir.

RK
vidarbhapuri

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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21 July 2011 The A O is right in taking the income on accrual basis. A bank can not adopt one method for payment of FDR interest and another method for receiving locker rental income. When the income is certain to be received, when the income is due, the bankers have to account for it on the due basis.

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