Commision in kinds .treatment ,will it be allowable expense

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Arslan Javed Warraich (Querist)
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15 May 2017 if we paid the payment of a booking agent in kind of vehicles(and its our business to sell those vehicles)where sales tax invoices are issued in different names according to the written instruction from booking agents and income tax withheld and deposited as per provisions of tax law....

so the question is the commision we have paid in for of vehicles is a admissible expense or not.what is the tax treatment...can we pay commissions in kind...will it be considered our sale or commssion expense...and can we deduct that expense while compution taxable income

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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16 May 2017 you can pay commission in kind,
and since you are billing the vehicle also through which the commission amount is being adjusted it will be treated as sale also
Tds is applicable on the commission amount which needs to be adjusted first and then adjusting the amount from sale
or to be paid and to be recovered from the agent if vehicle is sold without tds adjustment
also commission is an allowable expense

suggestion: for better accounting
pay the commission amount after deducting TDS and then take a cheque from him against the sale

Arslan Javed Warraich

Arslan Javed Warraich (Querist)
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16 May 2017 tds has been deducted and been desposited as per the provisions of law..but as we have paid the commission in kind .so would our tax liability be discharged ...can we claim the commssion in kind as a allowable deduction while computing taxable income

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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16 May 2017 Yes, It is an allowable expense
provided TDS has been properly considered for

Arslan Javed Warraich

Arslan Javed Warraich (Querist)
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17 May 2017 is there any specific section which allows us to pay commission in kind..can you refer any case.plzzzzzz

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