08 September 2009
If sales tax is not routed through Profit & Loss A/c and shown in duties & taxes, whether sales tax payable will be disallowed if not paid before filing return?
08 September 2009
Accounting practice cannot override provisions of the Act - It is true that the Supreme Court has very often referred to accounting practice for ascertainment of profit made by a company or value of the assets of a company. But when the question is whether a receipt of money is taxable or not or whether certain deductions from that receipt are permissible in law or not, the question has to be decided according to the principles of law and not in accordÂance with accountancy practice. Accounting practice cannot overÂride section 56 or any other provision of the Act - Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 93 Taxman 502/227 ITR 172 (SC).
When the question is whether a receipt of money is taxable or not or whether certain deductions from that receipt are permissible in law or not, the question has to be decided according to the principles of law, and not in accordance with accountancy practice. Accountancy practice cannot override the provisions of the Act - CIT v. Vaikundam Rubber Co. Ltd. [2000] 241 ITR 50 (Ker.).
Thus, if a person borrows money for business purposes but utiÂlises that money to earn interest, however temporarily, the interest so generated will be his income, and merely because it was utilised to repay the interest on the loan taken by the assessee, it would not cease to be his income - Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 93 Taxman 502/227 ITR 172 (SC).
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