30 May 2014
If a company has received a show cause notice to disallowance of certain expense of Rs300 resulting in probable tax demand Rs. 100. The entire demand has been paid by the Company under protest.
Should Rs. 100 will now be disclosed in Notes to Accounts as Contingent liability.
One view of the Auditors is that since the amount has not been expenses off it should be shown as contingent liability. Another view of the Auditors is that since no further cash flow will be there so no need to show it as contingent liability.
30 May 2014
Contingent is something which is dependent on happening or non happening of a future event. In this case, the money is paid under protest...... so? the financial transaction is complete.....debit the amount to an appropriaqte account.....where is the question of contingency?.....yes you may write a note for this......
31 May 2014
Maninder, don't get irritated. That is precisely the nature of COMMERCE. Seldom you will get the answers in YES or NO kind in commerce. Anyway, since u insist, keeping the fact as enumerated by you with its due meaning...... the answer is NO, it is not a contingent liability.
CAclubindia
