10 October 2016
Assessee C has debtors due from A of Rs. 40 lac. Now C wants to show in accounts debtor due from A - Rs. 20 lac and from another person B- Rs. 20 lac. (about which- A said B will pay on behalf of me). If this entry is correct to show in audited accounts when no sale is made to B and showing his name in accounts by entry only.
13 October 2016
Ideally, the liability of A cannot be extinguished and shouldnt be extinguished in books. It is possible A and B have some inter debt and this mode of settlement is only a mode of payment. By changing the account under which the debt is shown the liability of A to C does not get extinguished. If B fails to pay C, C is still going to enforce the debt from A The only way to do this is to enter a tripartite agreement wherein A transfers debt to B with C a party to the agreement.
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