TAX PICKINGS (ACCOUNTING STANDARDS, INCOME TAX ACT, AND COMPANIES ACT, 2013)
Section 145 of the IT Act, 1961 indicates as to how income is to be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Sub-section (2) of section 145 empowers the Central Government to notify the Accounting Standards to be followed by any class of assessee or in respect of any class of income. In exercise of the said power conferred the Central Government has issued Notification No. S.O. 69 (E) dated January 25,1996 ([1996] 218 ITR (St)1) whereunder the Accounting Standard–I relating to disclosure of accounting policies have been notified. As per the proviso section 211(3C) of the Companies Act, 1956 standards of accounting specified by the Institute of Chartered Accountants of India are deemed to be accounting standards until the accounting standards are prescribed by the central Government. In other words, the companies are required to adopt and follow the accounting standards as prescribed by the Instituted of Charter