Cheque dishonour and bank charges

This query is : Resolved

Shivani (Querist)
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07 August 2015 Dear Experts

X sells goods of Rs. 10000 to Y.
Y gives X a cheque of Rs. 10000.
X deposits cheque with bank but it is dishonoured.
Bank levies charges of Rs. 100.
X wishes to recover the charges from Y.

Entries in books of X

Y 10000
to sales 10000
(goods sold to Y)

Bank 10000
To Y 10000
(payment received from Y)

Y 10000
To Bank 10000
(cheque dishonoured)

Bank charges 100
to Bank 100
(bank charges levied by bank for dishonour)

I don't know how to pass rest of the entries of recovering bank charges from Y.

please help

regards

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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07 August 2015 Y A/c -Dr Rs.100
To. Bank Charges Rs. 100

(Being cheque dishonor charges recovered from Y)

Shivani

Shivani (Querist)
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08 August 2015 Dear John Sir

I was also thinking of passing the same entry but then I thought if I pass this entry then my balance in bank charges will go ZERO.

If my balance goes ZERO then how will I be able to claim its deduction in income tax.

Am I thinking right

OR

Bcoz I recovered bank charges from Y, this is no longer my business expense and I am not entitled to its deduction in income tax.

regards

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CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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08 August 2015 The expense is not incurred by you. So, you can't claim it.

Expense took place only because of the fault of the other person. So, it has to be recovered from him.