Section 43(3) of the Income Tax Act

An assessee has the liberty to adopt any recognized method of accounting, and income should be computed according to that system. Income Tax authorities cannot dictate the method of accounting or the valuation of work-in-progress.

The court considers the application of Section 145 of the Income Tax Act regarding accounting methods and the implications of cancellation clauses in agreements, including compensation to lessees.

Expenditure not allowable under Section 36(1)(iv) of the Income Tax Act may still be allowable under Section 37 of the Act, even if the Tribunal followed this decision.

An assessee is entitled to follow the cash basis of accounting if consistently adopted, especially in the initial year of commercial operations.

The case establishes that when a cash basis of accounting is followed, upfront premiums received in earlier years and accrued as income proportionately in a subsequent assessment year, cannot be subjected to tax in the impugned assessment year. Assessing Officers had accepted amortization of such income in earlier assessment years.

Upfront premium received for a concession or lease, which is non-refundable even upon premature termination, is considered a revenue receipt for tax purposes.

An assessee is entitled to claim the balance 10% of additional depreciation in a subsequent assessment year, even before the insertion of specific provisos, if the machinery was put to use for less than 180 days in the first year.

An assessee is entitled to claim the remaining 10% of additional depreciation in a subsequent year.

Section 80P of the Income Tax Act is to be interpreted liberally to encourage the growth of the cooperative sector, rather than narrowly restricting its scope for exemptions.