11 February 2012
Mr.Z is a sub agent of Mr.X (clearing and forwarding agent). He receives goods from A ltd. to be exported. He then sends goods to main agent MR. X. He, Mr. Z, charges Rs.6lakh as clearing and forwarding exp. from A ltd. However he pays 5.50 lakh to main agent Mr.X. Total receipts of this nature is Rs.35 lakh and expenses are 33lakh.Now how should he, Mr. Z, show this 35lakh and 33 lakh in his books of accounts. Whether 35 lakh is gross receipt and 33 lakh as expense. If yes,then Section 44AD of income tax will calculate 8% of 35 lakh will be 2.80 lakh as income. Further Service tax will also be applicable on receipts more than 10 lakh. Please explain how should the receipts and payment of this nature to be shown int the profit and loss account and changeability of section 44AD.
CAclubindia
