Anjali Das (Industrial Trainee) (109 Points)
03 December 2011Thanks in advance to all the members who reply to this thread.I want to know if a possible issue can be framed out of the fact that the client has a credit balance of customers lying with them for over 4-5 years??? If yes, then its hould be written back as an income, so what is the act/rules/section governing the same??
CA Deepesh Ruhela
(Keen to Learn)
(3271 Points)
Replied 03 December 2011
/articles/section-68-of-income-tax-act-1961-9781.asp
Anjali Das
(Industrial Trainee)
(109 Points)
Replied 04 December 2011
Thanks a lot Deepesh..it helped me a lot..!!
CA SHRIPAL LUNIYA
(CA, CS Final & M.Com)
(744 Points)
Replied 04 December 2011
| Originally posted by : Deepesh Ruhela | ||
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Under Sec.68 of IT Act, unexplained credit is taxed. /articles/section-68-of-income-tax-act-1961-9781.asp It is a time barred debt, it should be transfered to P&L A/c. It will be taxed u/s 41(Deemed Income). |
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Agreed wid Deepesh
Anjali Das
(Industrial Trainee)
(109 Points)
Replied 07 December 2011
@ Deepesh..Just had another query regarding the same issue. I came across a term "Open ended debt" which I think, applies to this case since, the credit balance is unsettled because the client did not do any business with the customer. which section of Limitation Act, 2005 applies to this case.
Further, since the source of the credit balance is identified(i.e. credit balance is unsettled since no request letter is received from the customers claimin the amount), can this be regarded as unidentified income and debited to P&L A/C as suggested by you?
CA Deepesh Ruhela
(Keen to Learn)
(3271 Points)
Replied 22 December 2011
sorry Anjali for late reply...no idea about Limitation Act. In case if the source of the credit balance is identified and there is no chance of repayment, and the credit balance stand in balancesheet since last 3 or more years. Then it should be transfer to P&L A/c.(credited to P&L A/c not debited)
CAclubindia
