ADDL CIT Vs. NATIONAL DAIRY DEVELOPMENT BOARD

JUDGEMENT

(1.) APPELLANT -Revenue has proposed the following two questions:

(2.) THE Assessment Year is A.Y.2003 -2004, the relevant accounting period being Financial Year ended on 31st March, 2003. It is an accepted fact that respondent -assessee was constituted under National Dairy Development Board Act, 1987, with effect from 12.10.1987. Section 44 of the Income Tax Act, 1961 ("the Act"), as it stood upto 31.3.2003, reads as under:

(3.) THE first dispute relates to a sum of Rs.105,27,20,724/ - which was brought to tax by the Assessing Officer applying provisions of Section 145(3) read with Section 145(1) of the Act. According to the Assessing Officer, the assessee was following hybrid system of accounting, i.e. cash system for interest income and mercantile system for expenditure upto Financial Year 2000 -01. For the Financial Year 2001 -02, the Board of the assessee, by virtue of Resolutions dated 13.5.2002 and 27.5.2002, changed the system of accounting and decided to henceforth account all income and expenditure on accrual basis with effect from 1.4.2001. It is the say of the Assessing Officer that this change of system of accounting was not showing the correct income and the amount of interest received during the accounting period relevant to the assessment year in question was escaping tax as a result of such change. That the assessee was not entitled to retrospectively change the method of accounting. The order of the Assessing Officer has been upheld by Commissioner (Appeals). In second appeal, the Tribunal has upheld the stand of the assessee and granted relief holding that the amount in question was not taxable during the year under consideration as the same had not accrued during the relevant accounting period.