Section 145(2) of the Income Tax Act

Income-tax Act, 2025: s.276

Section 145(2) falls under section 145 of the Income-tax Act, 1961, which corresponds to section 276 (Method of accounting) of the Income-tax Act, 2025.

Read section 276 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 145(2) is CIT v. Birla Gwalior (P.) Ltd. (89 ITR 266), cited in 83 of the 258 judgments on BharatTax that turn on this section.

Leading authorities on Section 145(2)

CIT v. Birla Gwalior (P.) Ltd.
89 ITR 266 · 1973 · Supreme Court
83
citing judgments

The Supreme Court holds that income tax is levied on real income, not on hypothetical or notional accrual. For income to be taxable, it must genuinely accrue or be received, taking into account the realistic probability of its realization.

DCIT v. Bank of Bahrain & Kuwait
41 SOT 290 · 2010 · ITAT
81
citing judgments

Mark-to-Market (MTM) losses on forward contracts and forex derivatives are allowable as a revenue deduction under Section 37(1) where a binding obligation is created against the assessee. This is provided the assessee consistently follows the same accounting method for both profits and losses.

Bright Enterprises Pvt. Ltd. v. CIT
381 ITR 107 · 2016 · High Court
64
citing judgments

No disallowance of interest expenditure can be made under Section 36(1)(iii) merely on the presumption of diversion of borrowed funds, if the assessee possesses sufficient interest-free own funds to cover interest-free advances.

Mcorp Global P. Ltd. v. CIT
309 ITR 434 · 2009 · Supreme Court
56
citing judgments

The Income Tax Appellate Tribunal cannot enhance an assessment or take back a benefit granted to an assessee by the Assessing Officer. The Tribunal's power under section 254(1) is not to enhance the assessment.

Dhoomketu Builders & Development (P.) Ltd. v. ACIT
368 ITR 680 · 2014 · High Court
41
citing judgments

A real estate development business is considered 'set up' when the assessee is in a position to undertake activities for the acquisition, development, and exploitation of real estate. Expenses incurred between the setting up and commencement of such a business are allowable, even if no revenue is generated or land is classified as a non-current investment.

State of Orissa v. Maharaja Shri B.P. Singh Deo
76 ITR 690 · 1970 · Supreme Court
40
citing judgments

An assessment order enhancing income without disclosing the basis of enhancement and relying on mere suspicion is not sustainable. Best judgment assessment must be based on relevant material and cannot be arbitrary.

CIT v. Anil Kumar
392 ITR 552 · 2017 · High Court
40
citing judgments

When there is nothing on record to establish the financial capacity, creditworthiness, or relationship of a donor with the assessee, an addition to income can be justified.

CIT v. Ansal Housing and Construction
389 ITR 373 · 2016 · High Court
37
citing judgments

Income from unsold flats in the closing stock of a real estate developer is taxable under the head 'Income from house property' based on their annual letting value, even if the developer is engaged in business.

Prestige Estate Projects (P) Ltd. v. DCIT
33 DTR 514 · 2010 · ITAT
28
citing judgments

A real estate developer adopting the completed contract method of accounting cannot be forced to follow the percentage completion method under AS-7 if AS-7 has not been specified by the Central Government under section 145(2). The Assessing Officer cannot reject accounts under section 145(3) solely on this ground.

N.R. Paper & Boards Ltd. v. Dy. CIT
234 ITR 733 · 1998 · High Court
22
citing judgments

Block assessments for undisclosed income are independent of regular assessments and operate in a separate field. Undisclosed income under Chapter XIV-B is classified and assessed separately at a higher tax rate.

Judgments on Section 145(2)

Bimetal Bearings Limited, Chennai vs. DCIT, Chennai

In the result, the appeal filed by the assessee for the assessment year

ITA 671/CHNY/2015[2010-11]Status: DisposedITAT Chennai29 Aug 2019AY 2010-11

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. Nos. 668, 669, 670 & 671/Chny/2015 िनधा"रण वष"/Assessment Years:2007-08 To 2010-11 M/S. Bimetal Bearings Limited, The Deputy Commissioner Of 18, Race Course Road, Vs. Income Tax, Large Taxpayer Unit, Coimbatore 641 018. 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension, [Pan:Aaacb2036Q] Chennai 600 101. (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Vijayaraghavan, Advocate ""थ" की ओर से/Respondent By : Shri Ar.V. Sreenivasan, Jcit सुनवाई की तारीख/ Date Of Hearing : 02.07.2019 घोषणा की तारीख /Date Of Pronouncement : 29.08.2019 आदेश /O R D E R Per Duvvuru Rl Reddy: These Four Appeals Filed By The Same Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai All Dated 30.01.2015 Relevant To The Assessment Years 2007-08, 2008-09, 2009-10 & 2010-11. Since Common Issues Have Been Raised In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri R. Vijayaraghavan, AdvocateFor Respondent: Shri AR.V. Sreenivasan, JCIT
Section 14ASection 40

Bimetal Bearings Limited, Chennai vs. DCIT, Chennai

In the result, the appeal filed by the assessee for the assessment year

ITA 670/CHNY/2015[2009-10]Status: DisposedITAT Chennai29 Aug 2019AY 2009-10

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. Nos. 668, 669, 670 & 671/Chny/2015 िनधा"रण वष"/Assessment Years:2007-08 To 2010-11 M/S. Bimetal Bearings Limited, The Deputy Commissioner Of 18, Race Course Road, Vs. Income Tax, Large Taxpayer Unit, Coimbatore 641 018. 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension, [Pan:Aaacb2036Q] Chennai 600 101. (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Vijayaraghavan, Advocate ""थ" की ओर से/Respondent By : Shri Ar.V. Sreenivasan, Jcit सुनवाई की तारीख/ Date Of Hearing : 02.07.2019 घोषणा की तारीख /Date Of Pronouncement : 29.08.2019 आदेश /O R D E R Per Duvvuru Rl Reddy: These Four Appeals Filed By The Same Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai All Dated 30.01.2015 Relevant To The Assessment Years 2007-08, 2008-09, 2009-10 & 2010-11. Since Common Issues Have Been Raised In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri R. Vijayaraghavan, AdvocateFor Respondent: Shri AR.V. Sreenivasan, JCIT
Section 14ASection 40

Bimetal Bearings Limited, Chennai vs. DCIT, Chennai

In the result, the appeal filed by the assessee for the assessment year

ITA 669/CHNY/2015[2008-09]Status: DisposedITAT Chennai29 Aug 2019AY 2008-09

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. Nos. 668, 669, 670 & 671/Chny/2015 िनधा"रण वष"/Assessment Years:2007-08 To 2010-11 M/S. Bimetal Bearings Limited, The Deputy Commissioner Of 18, Race Course Road, Vs. Income Tax, Large Taxpayer Unit, Coimbatore 641 018. 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension, [Pan:Aaacb2036Q] Chennai 600 101. (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Vijayaraghavan, Advocate ""थ" की ओर से/Respondent By : Shri Ar.V. Sreenivasan, Jcit सुनवाई की तारीख/ Date Of Hearing : 02.07.2019 घोषणा की तारीख /Date Of Pronouncement : 29.08.2019 आदेश /O R D E R Per Duvvuru Rl Reddy: These Four Appeals Filed By The Same Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai All Dated 30.01.2015 Relevant To The Assessment Years 2007-08, 2008-09, 2009-10 & 2010-11. Since Common Issues Have Been Raised In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri R. Vijayaraghavan, AdvocateFor Respondent: Shri AR.V. Sreenivasan, JCIT
Section 14ASection 40

Bimetal Bearings Limited, Chennai vs. DCIT, Chennai

In the result, the appeal filed by the assessee for the assessment year

ITA 668/CHNY/2015[2007-08]Status: DisposedITAT Chennai29 Aug 2019AY 2007-08

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. Nos. 668, 669, 670 & 671/Chny/2015 िनधा"रण वष"/Assessment Years:2007-08 To 2010-11 M/S. Bimetal Bearings Limited, The Deputy Commissioner Of 18, Race Course Road, Vs. Income Tax, Large Taxpayer Unit, Coimbatore 641 018. 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension, [Pan:Aaacb2036Q] Chennai 600 101. (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Vijayaraghavan, Advocate ""थ" की ओर से/Respondent By : Shri Ar.V. Sreenivasan, Jcit सुनवाई की तारीख/ Date Of Hearing : 02.07.2019 घोषणा की तारीख /Date Of Pronouncement : 29.08.2019 आदेश /O R D E R Per Duvvuru Rl Reddy: These Four Appeals Filed By The Same Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai All Dated 30.01.2015 Relevant To The Assessment Years 2007-08, 2008-09, 2009-10 & 2010-11. Since Common Issues Have Been Raised In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri R. Vijayaraghavan, AdvocateFor Respondent: Shri AR.V. Sreenivasan, JCIT
Section 14ASection 40

Devashree Ispat (P) Ltd., Kolkata vs. ITO Ward - 3(4), Kolkata

Appeal is allowed

ITA 2113/KOL/2018[2010-11]Status: DisposedITAT Kolkata22 Mar 2019AY 2010-11

Bench: Shri S.S, Godaraassessment Year:2010-11 Devashree Ispat (P) Ltd., Income Tax Officer, बनाम / C/O Sri S.L Kochar, Ward-3(4), Aayakar V/S. Advocate, 5, Ashutosh Bhawan, Poorva, Choudhury Avenue, Kolkata-107 Kolkata-19 [Pan No.Aaccd 0753 E] .. अपीलाथ" /Appellant ""यथ" /Respondent Shri Anil Kochar, Advocate अपीलाथ" क" ओर से/By Appellant Shri C.J. Singh, Jcit, Sr-Dr ""यथ" क" ओर से/By Respondent 06-03-2019 सुनवाई क" तार"ख/Date Of Hearing 22-03-2019 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R This Assessee’S Appeal For Assessment Year 2010-11, Arises Against The Commissioner Of Income-Tax (Appeals)-22, Kolkata’S Order Dated 20.07.2018 Passed In Case No.109/Cit(A)-22/10-11/15-16/Kol, Involving Proceedings U/S. 143(3) Of The Income Tax Act, 1961; In Short ‘The Act’. Heard Both The Parties. Case File Perused. 2. The Assessee’S Sole Substantive Ground Challenges Correctness Of Both The Lower Authorities Action Adding Excess Difference Of ₹4,61,966/- As Income Of The Impugned Assessment Year. The Cit(A)’S Detailed Discussion To This Effect Reads As Under:- “06. Findings & Decision: 1. I Have Carefully Considered The Action Of The Ld. Ao As Also The Reasons Recorded For Such Action, As Well As The Arguments Advanced By The Appellant/Ld. Ars. I Have Carefully Perused The Judicial Decisions Available On The Subject. In Ao Has Discussed His Reasons For Making The Addition On Account Of Marked To Market Foreign Exchange Gain Of Rs.4,61,966/-. In The Audit Report Accompanying The Accounts, The Auditor Had Categorically Mentioned That Unrealized Foreign Exchange Gain On The Open Forward Contracts At The Year-End Amounted To Rs.4,61,966/-. Upon Being Questioned By The Ld Ao As To Why This Gain Was Not

Section 143(3)