16 July 2012
a tv channel (a pvt.ltd.company) and a hotel (3 star hotel and a pvt.ltd. company) entered into a barter for exchange of advertising slots and hotel rooms, both for rs. 5 lakh each.
what are :- 1. accounting treatment 2. income tax & TDs 3. service tax effects.
my points of counter argument for thought 1. accounting can be ignored as its not a financial transaction (its a barter)
2. income tax/tds - not required as there is no payment at all. (194C applies only to payment)
3. service tax if considered, hotel will loose as input credit is restricted only to 60% (i.e. output liability).
irrespective of tax loss if any, please tell accounting and tax effect as per rules.
17 July 2012
Where any sum is paid or credited for carrying out any work mentioned, tax shall be deducted at source 194C is applicable Accounting treatment effect will be nil but it will be proper to account them following entries will be passed
at the time of Hotel making sale or provding Room Service
Adv.co a/c Dr to Room Service or Sale
at the time of Adv co providing Service
Adv Exp. A/c Dr to Adv Co.a/c
Entries are as per the records in the books of hotel
CAclubindia
