Manish (student) (47 Points)
05 July 2011Is there any rule in income tax or company act which do not allow to set off debit balance and credit balance of same person? FOR EXAMPLE -
In books of Mr A.
Sale to mr X - Mr. X Debtor 500/-
Purchase from Mr X. - Mr X Creditor 400/-
By Mr X 400 dr
To Mr X 400 cr
Now balance remains - Mr x debtor 100/-
IS THIS TYPE OF ENTRY ALLOWED OR WE HAVE TO GIVE MONEY AND RECEIVE MONEY ???
kamal kishor sen
(STUDENT Rajasthan)
(2156 Points)
Replied 05 July 2011
"As per accounting every transaction is required entry in books, but i think sett off is not allowed in income tax , But there is no need to first pay and than recieve or vise versa.
wait for expert comments.
CA Saiyum khan
(Practicing CA)
(690 Points)
Replied 05 July 2011
In my view there is nothing wrong in adjusting the debit balance against the credit balance. Now a days there are lot of Barter agreement among the corporate where in one company sell their services in lieu of some other services as per business need of each other.
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 05 July 2011
| Originally posted by : CA Saiyum khan | ||
 |
In my view there is nothing wrong in adjusting the debit balance against the credit balance. Now a days there are lot of Barter agreement among the corporate where in one company sell their services in lieu of some other services as per business need of each other. |
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AGREED.
CA Dipak
(achiever)
(238 Points)
Replied 06 July 2011
it is pemissible.sometime you have to purchase goods from party to whom you also sold goods.in income tax as well it is allow.
JINESH SHAH
(PRACTICING CA)
(151 Points)
Replied 06 July 2011
go ahead.. u can set off any number of transcations for same person..
srinivass
(CA Final)
(2466 Points)
Replied 06 July 2011
| Originally posted by : kaushal (taxbykk) | ||
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Nothing as such written in income tax therefore you can do it. I can remember rule 6DD where payment is made by book entry S 40A(3) is not applicable |
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PANKAJ AGARWALA
(Asst. Manager (Finance & Accounts))
(38 Points)
Replied 21 June 2014
Hi,
I have same issue but it is regarding presentation of the same in final accounts. Whether debit and credit of a same party can be set off in the following cases:
1)Advance given to X Rs. 100 against a Purchase Order; but invoice came for Rs. 70 for another Purchase Order.
2)Debit balance(Rs.100) appearing in Advance for Capital Goods but credit balance(Rs. 120) appearing in Creditors for Raw Materials
3)Advance given Rs. 150 for a work; work done but invoice not yet come, so provision taken for Rs. 150.
CAclubindia
