|DATE:||(Date of pronouncement)|
|DATE:||March 2, 2008 (Date of publication)|
In the case of a chit fund following the ‘completed contract method of accounting’ and offering income at the end of the chit, held, approving the method:
(i) Recognition/identification of income under the Act is attainable by several methods of accounting including the completed contract method or the percentage of completion method.
(ii) Every assessee is entitled to arrange its affairs and follow either the completed contract method of accounting or the percentage completion method of accounting and the same is binding on the department unless it is shown the chosen method distorts the profits.
(iii) Under the mercantile system of accounting, the matching of expenses and revenue (matching concept) is required to be done on accrual basis. (Taparia Tools vs. JCIT 260 ITR 102 (Bom) referred with approval.)