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“mercantile system of accounting”

ICDS & AccountingSection 145Section 1451,487 judgments

The decision most relied on for mercantile system of accounting is CIT v. Woodward Governor India Pvt. Ltd. (312 ITR 254), cited in 968 judgments on BharatTax.

Leading authorities on mercantile system of accounting

CIT v. Woodward Governor India Pvt. Ltd.
312 ITR 254 · 2009 · Supreme Court
968
citing judgments

Foreign exchange fluctuations, whether gains or losses, are inextricably linked to the underlying business transaction and must be accounted for under the mercantile system. The Supreme Court also affirmed the standard accounting principle of valuing stock at cost or net realisable value, whichever is lower.

CIT v. Excel Industries Ltd.
358 ITR 295 · 2013 · Supreme Court
935
citing judgments

When an income or expenditure is revenue neutral across different assessment years, where any benefit derived is offset by a corresponding liability or reversal, no additional tax liability arises, particularly concerning income recognition under the mercantile system of accounting.

Rotork Controls India Pvt. Ltd. v. CIT
314 ITR 62 · 2009 · Supreme Court
739
citing judgments

A provision for expenses, such as warranty, is a deductible liability for income tax purposes if it constitutes a present obligation arising from past events, and a reliable estimate of the amount of obligation is possible.

Kedarnath Jute Mfg. Co. Ltd. v. CIT
82 ITR 363 · 1971 · Supreme Court
654
citing judgments

Tax liability for an item of income or expenditure is determined solely by the provisions of the Income-tax Act. Entries in an assessee's books of account are not conclusive and do not govern the taxability or deductibility of an item, as the legal rights and obligations under the Act prevail.

Lalchand Bhagat Ambica Ram v. CIT
37 ITR 288 · 1959 · Supreme Court
570
citing judgments

Where an assessee maintains regular books of account, and these books are not rejected or found defective by the Assessing Officer, any cash deposits or available cash shown in the cash book, if sufficient to cover the transaction, cannot be treated as unexplained income or an addition under sections 68 or 69A.

Calcutta Co. Ltd. v. CIT
37 ITR 1 · 1959 · Supreme Court
341
citing judgments

When following the mercantile system of accounting, provisions for liabilities made on a scientific and rational basis are allowable as deductions, even if their actual quantification and discharge are deferred to a future date.

United Commercial Bank v. CIT
240 ITR 355 · 1999 · Supreme Court
314
citing judgments

Liabilities accrued on a notional basis are allowable as deductions under the mercantile system of accounting even if their exact quantification or discharge is deferred to a future date or if the demand itself is disputed.

M.M.Aqua Technologies Limited v. CIT
436 ITR 582 · 2021 · Supreme Court
308
citing judgments

Amendments to tax law that impose new obligations or change existing legal positions apply prospectively, even if stated to be "for the removal of doubts." The judgment also clarifies that deductions under Section 43B are allowed only on actual payment, overriding the mercantile system of accounting.

Judgments citing mercantile system of accounting

Overseas Infrastructure Alliance (India) Private Limtied, Mumbai vs. Assistant Commissioner of Income Tax Central Circle 6(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 4044/MUM/2025[2021-22]Status: DisposedITAT Mumbai20 Feb 2026AY 2021-22

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

account for the revenue/costs on an estimate basis and provide/recognize the same at the end of the financial year. Assessee follows mercantile system of accounting. Assessee had made provision of expenses in accordance with provisions of accounting standard AS- 29. Assessee tests the provision of expenses as on last ... with the accounting standards and report its foreign exchange fluctuations in compliance thereto. Exchange fluctuation loss is to be recognised in terms of mercantile system of accounting and is allowable deduction u/s. 37(1). 8.4. Ld. CIT(A) by taken note of the factual matrix while granting relief

Overseas Infrastructure Alliance (India) Private Limtied, Mumbai vs. Assistant Commissioner of Income Tax Central Circle 6(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 4043/MUM/2025[2019-20]Status: DisposedITAT Mumbai20 Feb 2026AY 2019-20

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

account for the revenue/costs on an estimate basis and provide/recognize the same at the end of the financial year. Assessee follows mercantile system of accounting. Assessee had made provision of expenses in accordance with provisions of accounting standard AS- 29. Assessee tests the provision of expenses as on last ... with the accounting standards and report its foreign exchange fluctuations in compliance thereto. Exchange fluctuation loss is to be recognised in terms of mercantile system of accounting and is allowable deduction u/s. 37(1). 8.4. Ld. CIT(A) by taken note of the factual matrix while granting relief

ACIT CC 6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 3998/MUM/2025[2017-18]Status: DisposedITAT Mumbai20 Feb 2026AY 2017-18

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

account for the revenue/costs on an estimate basis and provide/recognize the same at the end of the financial year. Assessee follows mercantile system of accounting. Assessee had made provision of expenses in accordance with provisions of accounting standard AS- 29. Assessee tests the provision of expenses as on last ... with the accounting standards and report its foreign exchange fluctuations in compliance thereto. Exchange fluctuation loss is to be recognised in terms of mercantile system of accounting and is allowable deduction u/s. 37(1). 8.4. Ld. CIT(A) by taken note of the factual matrix while granting relief

ACIT, CC-6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 3995/MUM/2025[2011-12]Status: DisposedITAT Mumbai20 Feb 2026AY 2011-12

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

account for the revenue/costs on an estimate basis and provide/recognize the same at the end of the financial year. Assessee follows mercantile system of accounting. Assessee had made provision of expenses in accordance with provisions of accounting standard AS- 29. Assessee tests the provision of expenses as on last ... with the accounting standards and report its foreign exchange fluctuations in compliance thereto. Exchange fluctuation loss is to be recognised in terms of mercantile system of accounting and is allowable deduction u/s. 37(1). 8.4. Ld. CIT(A) by taken note of the factual matrix while granting relief

Deputy Commissioner of Income Tax-(1), Raipur vs. Rajesh Kumar Singh, Raipur

In the result, this appeal of Revenue is allowed for statistical purposes

ITA 455/RPR/2025[2022-23]Status: DisposedITAT Raipur19 Feb 2026AY 2022-23

Bench: Shri Partha Sarathi Chaudhury, Jm & Shri Avdhesh Kumar Mishra, Am आयकर अपील सं. / Ita No: 455/Rpr/2025 (िनधा"रण वष" Assessment Year: 2022-23) Deputy Commissioner Of Income Tax, Vs Rajesh Kumar Singh, New Purena, Circle-1(1), Aaykar Bhawan, Ravigram, Ravigram S O, Civil Lines, Raipur, C. G., 492001. Raipur, Chhattisgarh, 492001 Pan: Ajnps2776H (अपीलाथ"/Appellant) (""थ" / Respondent) : िनधा"रती की ओर से / Assessee By : Shri Suraj Gupta, Advocate (Virtually) राज" की ओर से / Revenue By : Dr. Priyanka Patel, Sr. Dr सुनवाई की तारीख / Date Of Hearing : 03/02/2026 घोषणा की तारीख / Date Of : 19/02/2026 Pronouncement आदेश / O R D E R Per Avdhesh Kumar Mishra, Am: This Appeal For Assessment Year (‘Ay’) 2022-23 Filed By The Revenue Is Directed Against The Order Dated 13.05.2025 Of The Commissioner Of Income Tax (Appeals), [‘Cit(A)’], National Faceless Appeal Centre (‘Nfac’), Delhi Passed Under Section 250 Of The Income Tax Act, 1961 (‘Act’).

For Appellant: Shri Suraj Gupta, AdvocateFor Respondent: Dr. Priyanka Patel, Sr. DR
Section 133(6)Section 250Section 69C

while making it mandatory to compute the income under head 'business & profession' or 'Income from other sources' based on cash or mercantile system of accounting being regularly followed by the assessee, the word 'shall' have been specifically used to make it mandatory leaving no discretion to use any another method

Anju Purohit, Thane vs. ITO Ward-3(1), Kalyan

In the result appeal for assessment year 2017-18 stands allowed on legal issue raised in additional ground vide application dated 07/01/2026 and appeal for assessment year

ITA 6345/MUM/2025[2018-19]Status: DisposedITAT Mumbai17 Feb 2026AY 2018-19

Bench: Smt. Beena Pillai ()

Section 131Section 148Section 69A

drawing an inference that interest income had accrued to the assessee. 8.5. It was further submitted that the assessee is following the mercantile system of accounting and, therefore, interest income on the loan advanced would accrue on a year-to-year basis irrespective of actual receipt. The failure

Anju Purohit, Mumbai vs. ITO Ward-3(1), Kalyan

In the result appeal for assessment year 2017-18 stands allowed on legal issue raised in additional ground vide application dated 07/01/2026 and appeal for assessment year

ITA 6344/MUM/2025[2017-18]Status: DisposedITAT Mumbai17 Feb 2026AY 2017-18

Bench: Smt. Beena Pillai ()

Section 131Section 148Section 69A

drawing an inference that interest income had accrued to the assessee. 8.5. It was further submitted that the assessee is following the mercantile system of accounting and, therefore, interest income on the loan advanced would accrue on a year-to-year basis irrespective of actual receipt. The failure

Aaditya Construction, Korba vs. Income Tax Officer-I Korba, Korba

In the result, the appeal of the assessee is dismissed as above

ITA 536/RPR/2025[2014-15]Status: DisposedITAT Raipur16 Feb 2026AY 2014-15

Bench: Shri Partha Sarathi Chaudhury, Jm & Shri Avdhesh Kumar Mishra, Am आयकर अपील सं./Ita No: 536/Rpr/2025 (िनधा"रण वष" Assessment Year: 2014-15) Aaditya Construction, Vs Income Tax Officer- 1, Korba 56, Indira Complex, Transport Nagar, Mahanadi Extension Complex, Korba-495001, C.G. Ghantaghar, Niharika Road, Kashi Nagar, Korba-495677, C.G. Pan: Aapfa5390N (अपीलाथ"/Appellant) (""थ" / Respondent) : िनधा"रती की ओर से / Assessee By : None राज" की ओर से / Revenue By : Dr. Priyanka Patel, Sr. Dr सुनवाई की तारीख / Date Of Hearing : 08/01/2026 घोषणा की तारीख / Date Of : 16/02/2026 Pronouncement आदेश / O R D E R Per Avdhesh Kumar Mishra, Am:

For Appellant: NoneFor Respondent: Dr. Priyanka Patel, Sr. DR
Section 250Section 44A

while making it mandatory to compute the income under head 'business & profession' or 'Income from other sources' based on cash or mercantile system of accounting being regularly followed by the assessee, the word 'shall' have been specifically used to make it mandatory leaving no discretion to use any another method

R J Corporation, Mumbai vs. Income Tax Officer, 42(1)(4), Mumbai

In the result, both the appeals of the assessee are allowed

ITA 7715/MUM/2025[2011-12]Status: DisposedITAT Mumbai11 Feb 2026AY 2011-12

Bench: SHRI SAKTIJIT DEY (Vice President), SHRI MAKARAND VASANT MAHADEOKAR (Accountant Member)

Section 133(6)Section 143(3)Section 145(3)Section 147Section 148Section 250Section 271(1)(c)Section 274

Case 2. The assessee is a partnership firm engaged in the business of Building Material Supplier and allied services and follows mercantile system of accounting. For both the assessment years under consideration, information was received by the Assessing Officer from the Sales Tax Department and DGIT (Investigation), Mumbai

R J Corporation, Mumbai vs. Income Tax Officer, 42(1)(4), Mumbai

In the result, both the appeals of the assessee are allowed

ITA 7714/MUM/2025[2010-11]Status: DisposedITAT Mumbai11 Feb 2026AY 2010-11

Bench: SHRI SAKTIJIT DEY (Vice President), SHRI MAKARAND VASANT MAHADEOKAR (Accountant Member)

Section 133(6)Section 143(3)Section 145(3)Section 147Section 148Section 250Section 271(1)(c)Section 274

Case 2. The assessee is a partnership firm engaged in the business of Building Material Supplier and allied services and follows mercantile system of accounting. For both the assessment years under consideration, information was received by the Assessing Officer from the Sales Tax Department and DGIT (Investigation), Mumbai

Aditya Birla Sun Life Amc Limited, Maharashtra vs. The Deputy Commissioner of Income Tax- Circle 6(1)(1), Maharashtra

ITA 6703/MUM/2025[2023-24]Status: DisposedITAT Mumbai06 Feb 2026AY 2023-24

Bench: Shri Amit Shukla & Shri Makarand Vasant Mahadeokar1. Ita No. 6663/Mum/2025 (Assessment Year: 2017-18) 2. Ita No. 6701/Mum/2025 (Assessment Year: 2018-19) 3. Ita No. 6702/Mum/2025 (Assessment Year: 2022-23) & 4. Ita No. 6703/Mum/2025 (Assessment Year: 2023-24) Aditya Birla Sun Life Dcitcircle-6(1)(1), Amc Limited, Room No. 502, 5Th 17Th Floor, One World Vs. Floor, Aayakar Centre Tower-1, Jupiter Bhavan, M. K. Mill Compount, 841, Road, Churchgate, Senapati Bapat Marg, Mumbai-400 020 Delisle Road, S.O. Mumbai-400 013 Pan/Gir No. Aaacb6134D (Applicant) (Respondent) Assessee By Shri Ronak Doshi, Shri Shrey Agrawal & Shri Aadish Jain, Ld. Ars Revenue By Shri Surendra Mohan, Ld. Dr Date Of Hearing 27.01.2026 Date Of Pronouncement 06.02.2026

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 144BSection 250Section 270ASection 36(1)(va)Section 40Section 43B

Though the assessee explained that the provision was made on actuarial valuation in accordance with AS-15 and under the mercantile system of accounting, the Assessing Officer held that the liability had not crystallised during the year. He treated the provision as an unascertained liability, further observing that the provision ... linking it to actual payment and does not alter the character of leave encashment liability as a present and accrued liability under the mercantile system of accounting. The Hon’ble Supreme Court has categorically observed that the amendment neither reverses the nature of the liability nor extinguishes the deduction

Aditya Birla Sun Life Amc Limited, Maharashtra vs. The Deputy Commissioner of Income Tax Circle 6(1)(1), Maharashtra

Accordingly, this ground is allowed

ITA 6663/MUM/2025[2017-18]Status: DisposedITAT Mumbai06 Feb 2026AY 2017-18
Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 144BSection 250Section 270ASection 36(1)(va)Section 40Section 43B

Though the assessee explained that the provision was made on actuarial valuation in accordance with AS-15 and under the mercantile system of accounting, the Assessing Officer held that the liability had not crystallised during the year. He treated the provision as an unascertained liability, further observing that the provision ... linking it to actual payment and does not alter the character of leave encashment liability as a present and accrued liability under the mercantile system of accounting. The Hon'ble Supreme Court has categorically observed that the amendment neither reverses the nature of the liability nor extinguishes the deduction

Maharashtra State Electricity Transmission Company Limited, Mumbai vs. ITO Circle 14(1)(1), Mumbai

ITA 2552/MUM/2025[2016-17]Status: DisposedITAT Mumbai06 Feb 2026AY 2016-17

Bench: SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Madhao VichoreFor Respondent: Shri Solgy Jose
Section 143(3)Section 14A

Assessing Officer in this regard in view of the following - (a) the Assessee has itself stated that the Assessee was following mercantile system of accounting and had raised invoices for DPC during the relevant previous year, therefore, the DPC income had accrued during the relevant previous year; (b) the Assessee

JCIT(OSD)-14(1)(1), Mumbai vs. Maharashtra State Electricity Transmission Co. Ltd., Mumbai

ITA 2093/MUM/2025[2016-17]Status: DisposedITAT Mumbai06 Feb 2026AY 2016-17

Bench: SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Madhao VichoreFor Respondent: Shri Solgy Jose
Section 143(3)Section 14A

Assessing Officer in this regard in view of the following - (a) the Assessee has itself stated that the Assessee was following mercantile system of accounting and had raised invoices for DPC during the relevant previous year, therefore, the DPC income had accrued during the relevant previous year; (b) the Assessee

Shriram Fiance Ltd., Chennai vs. DCIT, Corporate Circle-3(1), Chennai

In the result, the appeal filed by the assessee is partly-allowed

ITA 2635/CHNY/2025[2014-15]Status: DisposedITAT Chennai05 Feb 2026AY 2014-15

Bench: Shri George George K & Shri Inturi Rama Raoआयकर अपील सं./Ita No.: 2635/Chny/2025 िनधा"रण वष"/Assessment Year: 2014-15 Shriram Finance Limited, The Deputy Commissioner (Since Shriram City Union Finance Vs. Of Income Tax, Limited Amalgamated With Corporate Circle 3(1), Shriram Transport Finance Co. Chennai. Ltd. & Presently Known As Shriram Finance Ltd.,) Sri Towers, Plot No.14A, South Phase, Industrial Estate, Guindy, Chennai – 600 032. Pan: Aaacs 7703H (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri R. Sivaraman, Advocate ""यथ" क" ओर से/Respondent By : Ms. Gouthami Manivasagam, Addl.Cit सुनवाई क" तारीख/Date Of Hearing : 04.02.2026 घोषणा क" तारीख/Date Of Pronouncement : 05.02.2026

For Appellant: Shri R. Sivaraman, AdvocateFor Respondent: Ms. Gouthami Manivasagam
Section 143(3)Section 148Section 250

shall be made in such manner and on such basis as the Income-tax Officer may determine, held that, “... the appellant followed the mercantile system of accounting both for book keeping purpose as well as for tax purposes. The appellant consistently and for over 30 years prior to the assessment

DCIT(Exemptions)-1(1), Mumbai vs. Aditya Birla Foundation, Mumbai

The appeals of the Revenue are dismissed

ITA 7609/MUM/2025[2017-18]Status: DisposedITAT Mumbai05 Feb 2026AY 2017-18

Bench: Shri Amit Shukla & Shri Makarand Vasant Mahadeokar & Dcit(Exemption)-1(1), Aditya Birla 6Th Floor, Mtnl Foundation, Building, Pedder Road, Vs. C-1, Aditya Birla Cumballa Hills, Centre, S. K. Mumbai-400 026 Ahiremarg, Worli, Mumbai-400 030 Pan/Gir No. Aaata0382P (Applicant) (Respondent) Assessee By Shri Ronak Doshi & Shri Surajsingh Devda, Ld. Ars Revenue By Shri Surendra Mohan, Ld. Dr Date Of Hearing 28.01.2026 Date Of Pronouncement 05.02.2026

Section 11Section 12ASection 13Section 13(1)(c)Section 13(2)(a)Section 13(3)Section 250

appreciating the fact that the assessee is a company registered u/s 25 of the Companies Act, 1956 and was statutorily required to follow mercantile system of accounting. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee ... claim without appreciating that the auditor in its report in accounting policies and notes to accounts has specifically mentioned that the foundation follows mercantile system of accounting and recognizes income and expenditure on accrued basis except leave encashment liability which is accounted on payment basis. 6. On the facts

DCIT(Exemptions)-1(1), Mumbai vs. Aditya Birla Foundation, Mumbai

The appeals of the Revenue are dismissed

ITA 7608/MUM/2025[2016-17]Status: DisposedITAT Mumbai05 Feb 2026AY 2016-17

Bench: Shri Amit Shukla & Shri Makarand Vasant Mahadeokar & Dcit(Exemption)-1(1), Aditya Birla 6Th Floor, Mtnl Foundation, Building, Pedder Road, Vs. C-1, Aditya Birla Cumballa Hills, Centre, S. K. Mumbai-400 026 Ahiremarg, Worli, Mumbai-400 030 Pan/Gir No. Aaata0382P (Applicant) (Respondent) Assessee By Shri Ronak Doshi & Shri Surajsingh Devda, Ld. Ars Revenue By Shri Surendra Mohan, Ld. Dr Date Of Hearing 28.01.2026 Date Of Pronouncement 05.02.2026

Section 11Section 12ASection 13Section 13(1)(c)Section 13(2)(a)Section 13(3)Section 250

appreciating the fact that the assessee is a company registered u/s 25 of the Companies Act, 1956 and was statutorily required to follow mercantile system of accounting. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee ... claim without appreciating that the auditor in its report in accounting policies and notes to accounts has specifically mentioned that the foundation follows mercantile system of accounting and recognizes income and expenditure on accrued basis except leave encashment liability which is accounted on payment basis. 6. On the facts

Bharat Manubhai Patel, Malad vs. ITO, Ward 41(3)(1), Mumbai

In the result, the appeal of the assessee bearing ITA No

ITA 6587/MUM/2025[2018-19]Status: DisposedITAT Mumbai05 Feb 2026AY 2018-19

Bench: SHRI ANIKESH BANERJEE (Judicial Member), SHRI MAKARAND VASANT MAHADEOKAR (Accountant Member)

For Appellant: Shri Subodh Ratnaparkhi, CAFor Respondent: Shri Leyaqat Ali Aafaqui (SR. AR)
Section 143(3)Section 2(47)Section 250

income chargeable under the head Profits and Gains of Business shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The general provision is subject to accounting standards that the Central Government may notify. The assessee is a builder and developer

Nomura Capital (India) Private Limited, Mumbai vs. Deputy Commissioner of Income Tax Circle 7(1)(1), Mumbai

In the result, grounds raised by the assessee are allowed

ITA 2851/MUM/2025[2012-13]Status: DisposedITAT Mumbai05 Feb 2026AY 2012-13

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

For Appellant: Shri Madhur Agarwal, AdvocateFor Respondent: Shri Leyaqat Ali Aafaqui, Sr. DR
Section 143(3)Section 145

followed by any class of the assessees or in respect of any class of income. Accordingly, under section 209 of the Companies Act, mercantile system of accounting has been made mandatory for companies. In other words, Accounting Standard, which is continuously adopted by an assessee, can be superseded or modified

DCIT Non Corp Circle2 Madurai, Madurai vs. Balasubramanian Chandradevi, Madurai

In the result, appeal of the Revenue is dismissed

ITA 3241/CHNY/2025[2018-19]Status: DisposedITAT Chennai03 Feb 2026AY 2018-19

Bench: Shri George George Kand Ms. Padmavathy.Sआयकर अपील सं./Ita No.3241/Chny/2025 िनधा"रण वष" /Assessment Year: 2018-19

For Respondent: Ms. R.Kavitha, Addl. CIT
Section 147Section 250Section 44A

report u/s 44AB of the Act for PAN: ADWPC2363B for the assessment year 2018-19, the assessee has mentioned that she has employed mercantile system of accounting. That being the case' the assessee ought to have admitted the accrued interest of Rs.44,000/-on the deposits for the assessment year