Supreme Court of India
Commissioner of Income Tax-vi v. Virtual Soft Systems Ltd.
INSC stands for INDIAN SUPREME COURT. A neutral citation scheme assigned by the Court itself, so a judgment can be cited without depending on a commercial law reporter. INSC is the neutral citation scheme assigned by the Supreme Court, so a judgment can be cited without depending on a commercial law reporter.
What the Court ordered
We are of the view that the Respondent is entitled for bifurcation of lease rental as per the accounting standards prescribed by the ICAI. Moreover, there is no express bar in the IT Act regarding the application of such accounting standards.
Judgment, page 12
From the headnote
Income Tax Act, 1961 – Deduction on account of lea se equalization charges from lease rental income – Entit lement for – Held: The bifurcation of the lease rental is, by no stretch of imagination, an artificial calculation and, therefo re, lease equalization is an essential step in the accounting process to ensure that real income from the transaction in the form of revenue rec eipts only is captured for the purposes of income tax – Moreover, there is no express bar in the IT Act which bars the bifurcation of th e lease rental – This bifurcation is analogous to the manne r in which a bank
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