Advance remain with the Supplier

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 April 2010 Dear members,

Our company had given advance of Rs 150,000/- to a Brick klin for supplying bricks. But unfotunetly Brick klin shut down due to some internal problems. since then our advance has been remaining in our Balance sheet. there is very little chance of recovering it. So what to do with the treatment.
Please share knowledge!
thanks

Rahul Gupta

Rahul Gupta (Expert)
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06 April 2010 In case, the amount of recovery is very remote and you are sure that it will not be recovered, then you can write off the amount by charging it to the P&L Account.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 April 2010 AGREE

Nazir

Nazir (Expert)
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06 April 2010 agreed..these are bad debts

CA Ashok Kumar Sahu

CA Ashok Kumar Sahu (Expert)
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06 April 2010 BOOKED AS BED DEBTS

CA Kapil B Gupta

CA Kapil B Gupta (Expert)
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06 April 2010 Company should lodge a case with Brick klin but for the time being a provision for Bad Debts should be recognized subjected to policy of the company but these will not be allowed as expenses by the tax department. This will depend on court decision. Simply debiting to PNL as bad debts is only for management purposes.

shakuntala chhangani

shakuntala chhangani (Expert)
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07 April 2010 If the debts are written off as bad in the books of a/c as per the co. policy after taking reasonable measures for recovering the same or proving to the satisfaction of AO that such measures if taken will be of no use, even under income tax u can claim the same as deduction u/s 36(1)(vii)

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