{"id":15615,"date":"2020-08-31T14:22:47","date_gmt":"2020-08-31T08:52:47","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=15615"},"modified":"2020-08-31T14:22:48","modified_gmt":"2020-08-31T08:52:48","slug":"itat-holds-the-supremacy-of-the-income-tax-act-over-the-accounting-standards","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/itat-holds-the-supremacy-of-the-income-tax-act-over-the-accounting-standards\/","title":{"rendered":"The ITAT holds the Supremacy of the Income Tax Act over the Accounting Standards"},"content":{"rendered":"\n

The Income Tax Appellate Tribunal laid\ndown that in case of any conflict between the provisions of The Income Tax Act\nand the Accounting Standards laid down by the Institute of Chartered Accountants\nof India, the provisions of the Act would prevail.<\/p>\n\n\n\n

Principles of Accounting Standards <\/h2>\n\n\n\n

Accounting Standards are basic\naccounting principles which lays down the procedures and principles for\nfinancial accounting. On the other hand the provisions of The Income Tax Act\nare used to compute the taxes to be levied on the taxable incomes. <\/p>\n\n\n\n

There are ways in which the Accounting Standards<\/em><\/strong>[1]<\/em><\/strong><\/a><\/sup> can be used to levy taxes on the incomes. These Accounting Standards even prescribe the treatment of the taxes levied on income and might sometimes have overlapping conditions and in such cases, conflict arises between the two.<\/p>\n\n\n\n

Read our article<\/b>:Major reforms aimed at Transparent Taxation for \u2018Honoring the Honest\u2019 \u2013 PM Modi launched.<\/a><\/mark><\/p>\n\n\n\n

Issues Raised on Decision of the Assessing Officer <\/h3>\n\n\n\n

The appellant in this case challenged the decision of the Assessing Officer. The Assessing Officer has placed reliance on AS-2 and AS-16. <\/p>\n\n\n\n

\"Issues<\/figure><\/div>\n\n\n\n

The Assessing Officer held that the interest\ncost is not allowable and should be added to the cost of the inventory. The\nmain issue here was whether the provisions of The Act could prevail over the Accounting\nStandards.<\/p>\n\n\n\n

Interpretation of the Case <\/h3>\n\n\n\n

The\nbench held that the provisions mentioned under The Income Tax Act and the\nAccounting Standards laid down by the ICAI are of two different sets. They\nregulate different areas of incomes. The bench stated that as for deciding this\nissue the reliance will be laid on the well settled judicial precedent that is\nif there is a conflict between the two the provisions of the income tax act\nwould prevail. In the current case the Assessing Officer had referred to the AS\nbut since the AS were contradictory to the provisions of the Income Tax Act,\nthey would no longer apply. <\/p>\n\n\n\n

Views of Bench<\/h3>\n\n\n\n

The\nrespondent was unable to establish any precedence showcasing a decision\nopposite to this one whereas the assessee placed reliance on the case of DLF\nLimited vs ACIT(Supra) where a similar view was taken by the bench. The\nBangalore bench therefore, declined to interfere in the order of the CIT(A).<\/p>\n\n\n\n

Conclusion <\/h2>\n\n\n\n

The best time to start preparing your tax-saving investment is at the beginning of the financial year. Most taxpayers postpone until the last quarter of the year, resulting in pressurized decisions. As an alternative, if you plan at the start of the year, your investments can compound and help you achieve long-term goals. Tax-saving should be an additional perk and not a goal in itself. Our Corpbiz<\/strong><\/a> Professionals will help you with Income Tax Return Filing<\/strong><\/a> along with various compliances. <\/p>\n\n\n\n

Read our article<\/b>:CBDT Rolled Out New Conditions for Pension Funds for Income Tax Exemption<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"

The Income Tax Appellate Tribunal laid down that in case of any conflict between the provisions of The Income Tax Act and the Accounting Standards laid down by the Institute of Chartered Accountants of India, the provisions of the Act would prevail. Principles of Accounting Standards Accounting Standards are basic accounting principles which lays down […]<\/p>\n","protected":false},"author":18,"featured_media":15622,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[153,152],"tags":[942],"acf":{"service_id":"50"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":2991,"readingTime":2,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15615"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=15615"}],"version-history":[{"count":4,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15615\/revisions"}],"predecessor-version":[{"id":15621,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15615\/revisions\/15621"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/15622"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=15615"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=15615"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=15615"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}