02 June 2009
A public limited company incorproated in the year 1983 has become defunct. There is no manufacturing activities. There is no income. There are no employees in the company. Every year the company is drawing / adopting the Annual Accounts and obtain approval of Members. The returns with ROC and IT are being filed regularly without any default.
Under Sundry Debtors there are five parties from whom the company has to receive payment to the extent of Rs.1.50 lacs. This amount can never be recovered. There are also some advances given by the company and the possibility of recovering the same is remote.
Under Sundry Creditors there are two parties to whom the company owes Rs.1.26 lacs. There is no claim from these creditors and the company is not going to make this payment.
Is it mandatory to write off / write back the above amounts in the books of accounts. Which Accounting Standard stipulates such write off / write back.
What will be consequences on the company under the income tax law for writing off / writing back such amounts.
CAclubindia
