Search Results For: 44AB r.w.s. 44ADA

Method of Accounting vis-a-vis ICDS – 2016

QUERY: In case of Income from Profession Cash system is followed. However income from Other Sources (interest on FD etc.) is declared up to 31-3-2016 (A.Y. 2016-17) following mercantile system.
Assessee desires to follow cash system since 1-4-2016 (A.Y. 2017-18) even in respect of Income from Other Sources.
Assessee is liable to get his accounts audited u/s. 44AB r.w.s. 44ADA of the Act.
It appears that the change in method of accounting is necessitated for bringing uniformity in respect of two heads of Income and as such must be held to be bona fide.
In Form No. 3CD what type of disclosure should be made ? In A. Y. 2017-18 if no interest income is actually received. Income to be offered to tax would be ` NIL. Is it correct?
ANSWER: Click here to read the full answer of the expert

The Finance Act, 1995 amended section 145 of the Income-tax Act, 1961 with effect from assessment year 1997-98 to provide that income chargeable under the heads “Profits and Gains of Business or Profession” or “Income from Other Sources” must be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The hybrid system of accounting viz mixture of cash and mercantile is not permitted from assessment year 1997-98 and own wards. However, assessee may adopt mercantile system of accounting for business and cash system of accounting for income from other sources.

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