Under which head to be considered for payment made by others

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2015 Dear sir,

My client is involved in trading activities. This is the first year of its business and crossed the turnover of Rs. 1 crore. There is a one technical problem. He generally made purchases from 10 to 12 suppliers. His normal billing range is of Rs. 1.5 lacs to 2 lacs. In some cases, due to ignorance of law he has made payment against his purchase from 2 to 3 accounts of different persons. Mease for ex. purchase of Rs. 1.5 lacs against a single bill, he has made payment of Rs. 70000 from his current account, Rs. 40000 from his spouse's account and rs. 40000 from his friend's account. all these payments were made by cheques or RTGS. By this way, he has made payment in total of Rs 7.5 lacs from his spouse's account and around Rs. 9.00 lacs from his friends account. Now my question it, how to show this in books of accounts. As a loan or as a sundry creditors. In this year we would repay this amount by account payee cheques. Please suggest us to avoid scrutiny problems in future years..

CA AnKiT BoHrA (AB)

CA AnKiT BoHrA (AB) (Expert)
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28 September 2015 still third party payment is not good.. there is a more btter way out.. you can take the money paid by their account back from the customers..

and then pay the same with your account....

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2015 Dear sir,

Books of accounts of supplier have been audited and have been closed. They cant do any changes. Will there be any other solution..?

I think to show it as an unsecured loans as all payments were made by an account payee cheques to customers. My client will pay interest to both of them during last year as there was a shortage of fund with him, he had taken loan from his friends and relatives and in this year, he would repay the same with interest after deducting TDS from interest by account payee cheque.. Is it right..?

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CA AnKiT BoHrA (AB)

CA AnKiT BoHrA (AB) (Expert)
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28 September 2015 stil it wil b treated as wrong... but yes to make it better than what it is right now.. do as u said.. that will be better.... next time take care of these things well

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Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2015 Dear sir,
This year I have asked them to make payment by bill to bill from a single current account of firm and do not make payment of a single rupees by cash for any types of purchase. We know that up to Rs. 20000 is allowable but I have clearly asked them not to make payment by cash..
Thanks a lot sir..

CA AnKiT BoHrA (AB)

CA AnKiT BoHrA (AB) (Expert)
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28 September 2015 yes that's bettr.!!!!!!