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)

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)

25 December 2021 Yes, you can reverse it in 20-21

DIVYESH JAIN

DIVYESH JAIN (Querist)

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)

25 December 2021 No impact.................

DIVYESH JAIN

DIVYESH JAIN (Querist)

25 December 2021 Ok, Thanks a lot Sir for your guidance

DIVYESH JAIN

DIVYESH JAIN (Querist)

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)

26 December 2021 Yes it can be claimed.

DIVYESH JAIN

DIVYESH JAIN (Querist)

26 December 2021 Thanks for your reply

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