Extra expense claimed in Pvt ltd company

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This query is : Resolved

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A private limited company mistakenly booked an extra salary expense of £50,000 in FY 2018-19, causing a bank balance mismatch. The user inquired if this entry could be reversed in FY 2020-21 by reducing the salary expense. The advice given is that this reversal is permissible and will rectify the bank balance discrepancy. Additionally, it was confirmed that advance salary from FY 2018-19, on which TDS was deducted, can be claimed as an expense in FY 2020-21 to adjust profits.

DIVYESH JAIN

DIVYESH JAIN (Querist)
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25 December 2021 Dear Sir,

In F.Y. 2018-19 I had by mistake booked an extra entry of Rs. 50,000/- and wrongly claimed it as a salary expense in Books of accounts of a Pvt Ltd company (not under tax audit) which has resulted into mismatch in bank balance with books of accounts.

Can I reverse this entry in F.Y. 2020-21 by reducing salary amount by Rs. 50,000/- which will result in matching of Bank balance with books of accounts.

Please advise me in this matter.

Regards,
Divyesh Jain

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 December 2021 Yes, you can reverse it in 20-21

DIVYESH JAIN

DIVYESH JAIN (Querist)
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25 December 2021 In relation to the above matter in the statutory audit report this amount was shown as Remuneration to director. Will that have any impact

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 December 2021 No impact.................

DIVYESH JAIN

DIVYESH JAIN (Querist)
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25 December 2021 Ok, Thanks a lot Sir for your guidance

DIVYESH JAIN

DIVYESH JAIN (Querist)
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26 December 2021 Also want to add on one more point. Can a Salary expense which was shown as Advance Salary given in F.Y. 2018-19 and was not booked as expense by the company in F.Y. 2018-19 can be claimed as expense in F.Y. 2020-21 to adjust profit. (TDS was deducted on this amount in F.Y. 2018-19)

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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26 December 2021 Yes it can be claimed.

DIVYESH JAIN

DIVYESH JAIN (Querist)
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26 December 2021 Thanks for your reply

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