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Accounts error

ish kumar sharma (Sr. Manager Accounts & Finance) (301 Points)

17 December 2015

In the year 2014-15 we issued the bills of it services to a party but cancelled the same in the same year but no entry passed by us in books of accounts , also we filed return and audit report without knowing the fact and balance sheet showing the amount in debtors. what entry should we pass to remove the amount from debtor list, ??? can we show them as bad debts???

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24 Replies

CA Vasiullah (Vasi) (Audit Executive) (1813 Points)
Replied 17 December 2015

Yes sure, if the debtor is still standing in the accounts then you can book it as bad debt and claim the same as expense while filing Income Tax Return.

CA Vasiullah (Vasi) (Audit Executive) (1813 Points)
Replied 17 December 2015

Pass the entry with the amount

Bad debts written off ( Indirect Expenditure) Dr.

To Debtors

ish kumar sharma (Sr. Manager Accounts & Finance) (301 Points)
Replied 17 December 2015

But the amount is very heavy. its Rs 1508325/-, is it justifiable in legal terms to claim them as bad???

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(Guest)

u can only claim bad debt if the same was taken in calculation of income in previous year...so u cant claim BD expense

ish kumar sharma (Sr. Manager Accounts & Finance) (301 Points)
Replied 17 December 2015

I have already told that we have considered the same as income inlast year, why cant we declare them as bad debt expense.???

Abhishek Satam (financial execetive ) (86 Points)
Replied 17 December 2015

yes you can claim it as bad debts as u have already claimed it as an income and paid tax on it

(Guest)

if u have taken that income in last years return...u can definitely claim bad debt

CA Jaydev Modi (PRACTICE ) (49 Points)
Replied 17 December 2015

You have taken as bad debts because you have paid tax on last year and in current year you takes as bad debts.

CA Jaydev Modi (PRACTICE ) (49 Points)
Replied 17 December 2015

You have taken as bad debts because you have paid tax on last year and in current year you takes as bad debts.

Sumit (AM) (26 Points)
Replied 17 December 2015

You can take as Bad Debts

ashish (article) (151 Points)
Replied 17 December 2015

According to my perception..... It should not be shown as bad debts logically...... Rather it is a prior period item as per AS 5... And you should specifically show it like this. (As accounting perspective) And claim as deduction.... And to report it as prior period item while filling under relevant clause of form 3CD (for return perspective)

(Guest)

this is not a question of Accounting, rather an income tax query related to non-existent debtor...

sale was recorded in 14-15 and he paid income tax on the income....now he realises the sale was non-existent....which can be claimed as bad debt

vinod (Student CA Final ) (22 Points)
Replied 17 December 2015

If this matter related to service tax there is no allowance of bed debt.

Nishit Shah (Student CA IPC / IPCC) (25 Points)
Replied 17 December 2015

If you have taken income in last year you can show as bad debts, but make sure that at the time of showing bad debts in return you have to mention Pan no.....