How these expenses could be acccounted in the company's books of accounts

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This discussion addresses how to account for expenses incurred when a company remits a settlement amount to a defendant, as directed by a court. The consensus is to record this as compensation to the customer, which is typically allowable as a business expenditure.

Marimuthu

Marimuthu (Querist)
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29 June 2024 Dear Experts,
1 A company is remitting the settlement amount to the defendant as directed by Court.
2 How these expenses could be acccounted in the company's books of accounts?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 June 2024 In case of employees account it under remuneration head.

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Marimuthu

Marimuthu (Querist)
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01 July 2024 Thank you Sir,

this is the situation that one of customer has lodged the complaint with consumer forum.

In this situation how it can be accounted?

Please clarify

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 July 2024 Account it as compensation to the customer.
It will be allowed as business expenditure.

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