diff --git a/erpnext/accounts/doctype/cost_center/cost_center.js b/erpnext/accounts/doctype/cost_center/cost_center.js
index fb649e6d1b..e4db510cad 100644
--- a/erpnext/accounts/doctype/cost_center/cost_center.js
+++ b/erpnext/accounts/doctype/cost_center/cost_center.js
@@ -17,8 +17,7 @@ erpnext.accounts.CostCenterController = frappe.ui.form.Controller.extend({
 				return {
 					filters:[
 						['Account', 'company', '=', me.frm.doc.company],
-						['Account', 'root_type', '=', 'Expense'],
-						['Account', 'is_group', '=', '0'],
+						['Account', 'is_group', '=', '0']
 					]
 				}
 			});
diff --git a/erpnext/accounts/doctype/cost_center/cost_center.py b/erpnext/accounts/doctype/cost_center/cost_center.py
index 0f51a00cd6..072bf60863 100644
--- a/erpnext/accounts/doctype/cost_center/cost_center.py
+++ b/erpnext/accounts/doctype/cost_center/cost_center.py
@@ -32,13 +32,13 @@ class CostCenter(NestedSet):
 		for d in self.get('budgets'):
 			if d.account:
 				account_details = frappe.db.get_value("Account", d.account, 
-					["is_group", "company", "root_type"], as_dict=1)
+					["is_group", "company", "report_type"], as_dict=1)
 				if account_details.is_group:
 					frappe.throw(_("Budget cannot be assigned against Group Account {0}").format(d.account))
 				elif account_details.company != self.company:
 					frappe.throw(_("Account {0} does not belongs to company {1}").format(d.account, self.company))
-				elif account_details.root_type != "Expense":
-					frappe.throw(_("Budget cannot be assigned against {0}, as it's not an Expense account")
+				elif account_details.report_type != "Profit and Loss":
+					frappe.throw(_("Budget cannot be assigned against {0}, as it's not an Income or Expense account")
 						.format(d.account))
 
 				if [d.account, d.fiscal_year] in check_acc_list:
diff --git a/erpnext/accounts/utils.py b/erpnext/accounts/utils.py
index 199769416e..07606be1f7 100644
--- a/erpnext/accounts/utils.py
+++ b/erpnext/accounts/utils.py
@@ -310,7 +310,7 @@ def get_stock_and_account_difference(account_list=None, posting_date=None):
 
 def validate_expense_against_budget(args):
 	args = frappe._dict(args)
-	if frappe.db.get_value("Account", {"name": args.account, "report_type": "Profit and Loss"}):
+	if frappe.db.get_value("Account", {"name": args.account, "root_type": "Expense"}):
 			budget = frappe.db.sql("""
 				select bd.budget_allocated, cc.distribution_id
 				from `tabCost Center` cc, `tabBudget Detail` bd
diff --git a/erpnext/change_log/current/cost_center.md b/erpnext/change_log/current/cost_center.md
new file mode 100644
index 0000000000..956d4fc0f4
--- /dev/null
+++ b/erpnext/change_log/current/cost_center.md
@@ -0,0 +1 @@
+- 	Allowed Income account to be added to Cost Center
\ No newline at end of file
diff --git a/erpnext/setup/doctype/company/company.json b/erpnext/setup/doctype/company/company.json
index 12faa18ed5..910fc2e489 100644
--- a/erpnext/setup/doctype/company/company.json
+++ b/erpnext/setup/doctype/company/company.json
@@ -702,7 +702,7 @@
    "ignore_user_permissions": 0, 
    "in_filter": 0, 
    "in_list_view": 0, 
-   "label": "If Yearly Budget Exceeded", 
+   "label": "If Yearly Budget Exceeded (for expense account)", 
    "no_copy": 0, 
    "oldfieldname": "yearly_bgt_flag", 
    "oldfieldtype": "Select", 
@@ -727,7 +727,7 @@
    "ignore_user_permissions": 0, 
    "in_filter": 0, 
    "in_list_view": 0, 
-   "label": "If Monthly Budget Exceeded", 
+   "label": "If Monthly Budget Exceeded (for expense account)", 
    "no_copy": 0, 
    "oldfieldname": "monthly_bgt_flag", 
    "oldfieldtype": "Select", 
@@ -1092,7 +1092,7 @@
  "is_submittable": 0, 
  "issingle": 0, 
  "istable": 0, 
- "modified": "2015-09-14 02:55:54.678003", 
+ "modified": "2015-10-13 08:15:29.028637", 
  "modified_by": "Administrator", 
  "module": "Setup", 
  "name": "Company",