10 February 2015
For Example: A is a manufacturing Company. B is wholesaler and C is retailer.
C directly contacted A and ordered 50,000 worth of goods and deposited the cash in Company bank account. But the companies procedure is goods will send to wholesaler and then it will reach retailer.
Because of VAT the wholesaler will show in his vat return. In this case in Income tax whether he will get disallowance.
How to treat in books of account this transaction?
10 February 2015
Such types of transactions are very COMMON in India. What is your difficulty in such? Can you please elaborate. Passing JV for such transactions is used in books of accounts. No any question of dis-allowance. Can you please elaborate your fear of dis-allowance?
10 February 2015
My fear is will the wholesaler will get any disallowance under S.40A(3) and who has to prove that the cash is deposited by retailer and not wholesaler if dept asks wholesaler.
Can he adjust Debtor account and Creditor account?