24 June 2016
One of my client has the inventory reported incorrectly in the balance sheet since incorporation in 2011. I have figured it out now (he's my client only now) and wish to rectify the old errors. The tax returns and ROC returns have been filed for all these past years. How do I rectify now as it involves big amount of losses being written back. Can we show it as a separate line item in P&L? Is it valid as per Income Tax Act? Also, would like to know is there any impact under Companies Act ?
24 June 2016
Thanks for the response. All these years, payments done for Freight, Insurance, Custom duty and clearing charges were expensed off. They were not included for calculation of landed cost. Hence, the closing stock was always valued at supplier price resulting in higher losses as the unsold stock was never loaded with duties and other direct costs. If I rectify now, the rectified figure will make the current year's total costs to zero level. Would that be a problem with respect to Income Tax and Companies Act?
CAclubindia
