19 November 2010
CAN A SECURITY DEPOSIT GIVEN AT THE TIME OF ACQUIRING CONTRACT BE CLAIMED AS BAD DEBT IF THAT DEPOSIT IS IRRECOVERABLE AFTER A LONG SPAN OF TIME.IF YES PLS EXPALIN. THANKS IN ADVANCE
19 November 2010
As you clearly say its a security for the contract, the amount is a refundable once the contract is completed.
though the contract is completed & the security deposit amount is not recoverable & if the contractor feels that it is not recoverable & 3 years has elapsed, then you can claim it as bad debts. Even if 3yrs has not elapsed, But the Contractor is not in a position to collect the amount, he may claim it as bad debts.
IF THE SAME AMOUNT IS COLLECTED LATERON, THEN IT SHALL BE TAXABLE AS DEEMED INCOME, AS YOU HAVE ALREADY CLAIMED IT AS EXPENSES
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