Income Tax Act | Hypothetical Income Appearing In Books Of Account Is Not Taxable: Meghalaya High Court

The Meghalaya High Court ruled that hypothetical income appearing in books of account due to the application of accounting standards should not be taxed under the Income Tax Act. The case involved a dispute over the treatment of notional income arising from accounting adjustments, emphasizing that tax liability cannot be imposed solely on such hypothetical entries without corresponding real income. This decision underscores the distinction between actual taxable income and accounting adjustments, aligning with principles of income taxation under Indian law.