Query regarding chargeability under income from other source
This query is : Resolved
15 July 2012
Income Tax Act says that
"Income chargeable under the Head - 'Income from other sources' shall be computed in accordance with the method of accounting regularly employed by the assessee."
My query is whether such chargeability should be applied to entire income under above mentioned head as whole or individually to each source of income falling under that head ?
Practically speaking - if assessee has been regularly taxing 'Interest on FD' on accrual basis and 'Interest received from NSC' on cash basis since last many years,
is assessee wrong in doing so?
Please kindly explain the consequences, if other item in above example was 'Rental from Machinery' instead of Interest on NSC.
Please give references for your opinions.
Thanking you all.
"Income chargeable under the Head - 'Income from other sources' shall be computed in accordance with the method of accounting regularly employed by the assessee."
My query is whether such chargeability should be applied to entire income under above mentioned head as whole or individually to each source of income falling under that head ?
Practically speaking - if assessee has been regularly taxing 'Interest on FD' on accrual basis and 'Interest received from NSC' on cash basis since last many years,
is assessee wrong in doing so?
Please kindly explain the consequences, if other item in above example was 'Rental from Machinery' instead of Interest on NSC.
Please give references for your opinions.
Thanking you all.
15 July 2012
If you adopt two different systems of accounting it is called Hybrid System, which is not permissible by IT law.
.
Only the 2 methods -Cash and Accrual (Mercantile) are recognised.
.
Please refer Section 145.
.
.
Only the 2 methods -Cash and Accrual (Mercantile) are recognised.
.
Please refer Section 145.
.
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