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ENQUIRY ABOUT FOREIGN TOUR

Kumar Gaurav (Going...to be C.A soon...) (1624 Points)

27 June 2007

HI,

I M AN ACCOUNTANT IN A PROP.SHIP FIRM AND ALSO DOING C.A (INTER). MY QUESTION IS THAT 'PROPRIETOR OF OUR FIRM HAS A TOUR TO DUBAI LAST MONTH SO I WANA TO ASK THAT WHAT IS THE PROVISION REGARDING THIS .

i mean:

1) what is requirement in this regard ie. ticket copy, cash/bank transactions etc

2) how will i show this in profit & loss account

please do the needful

thx

gaurav

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3 Replies

Pramoth Jain (CA Practice ) (22 Points)
Replied 27 June 2007

Dear Gaurav, in my opinion, first you have to clarify whether the same is personal trip or an trip for business purpose. if it is the personal trip then the same cannot claimed as an allowable expenditure for the calculation of income tax, however you have enclose the copy of the ticket and evidenses for the expenses incurred such as lodging bill, food exp and conveyances etc. if it is business trip then you have to enclose the above details and the details of persons he has met during the visit and places visited along with the minutes of the meeting held with them.

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Nilanjan Chowdhury (114 Points)
Replied 28 June 2007

You need to check whether it is a personal trip or business trip. Supose it is a business trip you need to keep all the records pertaining to the visit for e.g. tickets, hotel bills,food expenses. On the other hand if the business falls under the tax audit u/s 44AB of the I.T. Act, 1961 then the tax auditor might reflect this expenses in their Form 3CD. In addition to this you can show this expenses as business promotion expenses justifying the purpose of visit. If it is a personal tour, there is a way to treat this expenses in your business head to inflate the expenses and to know in detail u need to pay me professional fees and not to be discussed in public domain. Just Joking but if u think deeply you will get the answer.

kanta jain (chartered accountants) (29 Points)
Replied 29 June 2007

Dear Gourav,

The expenses of foreign tour should be related to business object.
if yes, visa purpose is verifiable.
for documentary proof, receipt from tour agency, correspondence with the persons in abroad whom your partner met with is very important.
minute book is applicable in case of tour of directors in a company.

as your case concerns, the abroad tour expenses should be treated as personal expenses and should be shown in capital a/c of the partner.

thanks

ca kanta jain
durg-c.g