#Accounting Methods

The Supreme Court ruled that unpaid excise duty on sugar stock lying in a bonded warehouse cannot be added to taxable income under Sections 43B and 145A where the assessee follows the exclusive accounting method, has not claimed any deduction for such duty, and the goods remain unremoved. The decision clarifies that no tax liability crystallises under excise law until goods are actually cleared from the bonded warehouse, protecting manufacturers from phantom income additions on stock they cannot legally sell.

ITAT Ahmedabad clarifies that notional interest entries found in seized diaries do not constitute taxable income under Section 56 of the Income Tax Act, preventing double taxation. The ruling reinforces that only real accrual of income, not hypothetical accounting entries, can be taxed, offering relief to assessees facing arbitrary additions based on seized documents.