22 October 2024
A four wheeler vehicle is registered in the name of Pvt. Ltd. Company 'X' and depreciation is claimed every year.
Due to some reasons the above vehicle underwent for repairs and maintenance and the invoice amount was Rs. 2.73 lacs and this invoice amount was paid through Bank transaction by another Pvt. Ltd. Company 'Y' due to shortage of funds in Pvt. Ltd. Company 'X' .
One of the Directors in both the Companies is the same person.
How to pass the entries in books of account for the above payment of Rs. 2.73 lacs in both the Companies .
Any implication as per Income Tax Act and in reporting. Plz clarify.
22 October 2024
Company X (Vehicle Owner) Debit: Vehicle Repair & Maintenance Expenses (Expense Account) - Rs. 2.73 lacs Credit: Debtors/Payable to Company Y (Current Liability) - Rs. 2.73 lacs Company Y (Paying Company) Debit: Sundries/Payable by Company X (Current Asset) - Rs. 2.73 lacs Credit: Bank Account (Asset Account) - Rs. 2.73 lacs
22 October 2024
As such there are no transactions between these companies to be termed as related party transactions. A Related Party Transaction (RPT) refers to a transfer of resources, services, or obligations between entities that are connected through a relationship of control, ownership, or management.
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