Our client (partisanship Firm)is in trading business for that business principle manufacturer ("PM") incurring some marketing and promotional expenses, these expenses.
In this promotion activity there is no out flow or in flow for our client, consultancy firm will incur all promotional expenses and they will inform the amount to our client at a point of time,inturn the same will inform by our client to principle manufacturer (PM) then PM will issue cheque to our client and after credit of that amount our client will issue cheque to the consultancy firm. here our client is just a middle man and not receiving/ paying any additional amount here. Now, my query is can our client treat the amount received from PM as income? if so which kind of income it is??? and same amount will shown under business promotional expenses...or else what is the correct treatment for this transaction.
Note: PM is not having any capital/Investment in client business
CAclubindia
