Whether any discount (Read minimum guarantee or MG)received by a franchisee of a company can be shown as direct income in Trading Account??
What are the other direct incomes which can be shown in Trading Account?
s kumar (ca) (105 Points)
06 July 2009Whether any discount (Read minimum guarantee or MG)received by a franchisee of a company can be shown as direct income in Trading Account??
What are the other direct incomes which can be shown in Trading Account?
M.M.SURANA
(Director -Taxation )
(532 Points)
Replied 08 July 2009
Mr. Kumar
If discount form the part of purchase say cash discount we can take as a direct income and can be shown in trading a/c. In case discount is in form of trade discount or discount on achieving certain TO or target it is forming part of indirec income . In your case U r the franchisee and U hav recd. MG discount - I feel that it is not a cash discount . U r doing purchase and sales on behalf of your principal, hence it should be indirect income. If Anyone has diff. opinion pl. let me know.
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