How to account the income recd on 28-3-12

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 September 2012 Sir,

Company A raised an invoice including service tax on Company B dated 16-3-12 and recd 50% compensation amounting to Rs.25 lacs on 28-3-12 as per the terms of service agreement (supply of manpower)from Company B.Company B has deducted 10% TDS u/s.194J. The services are to be provided by Company A in apr12 and may12.

Company A could spent Rs.8 lacs out of 25 lacs between 28-3-12 to 31-3-12 in part performance of this contract.Eg. Booking air tickets, advance to hotel, designer dresses, etc.

My querry is---

Whether this 25 lacs should be treated as income or advance for the fy 11-12?

If it is treated as advance, then how to show 8 lacs and balance.

If it is treated as income, whether 16 lacs will be the profit (Rs.25 lacs - Rs. 8 lacs spent)in fy 11-12

What is the correct way of treating it in (A) income tax computation and (B) in accounts.

If u need any further information, My email id is
get2amin@rediffmail.com

Thanks

Amol S Joglekar

Amol S Joglekar (Expert)
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19 September 2012 Assuming ACCRUAL method, the service is to be delivered in apr and may 2012, both income and expenditure shall be charged to P&L in the year 2012-13. The TDS be claimed in the year 2011-12.

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Querist : Anonymous

Querist : Anonymous (Querist)

19 September 2012 Sir,

1) What about Rs.8 lacs spent in fy 11-12 out of the amt recd amounting to Rs.25 lacs.

2) Without crediting income of Rs.25 lacs in fy 11-12, can i claim TDS of Rs.2.5 lacs in fy 11-12 bec as per your opinion this income is for fy 12-13.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 September 2012 Both income and EXPENDITURE...... "matching principle"

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Querist : Anonymous

Querist : Anonymous (Querist)

19 September 2012 Sir,

Without crediting income of Rs.25 lacs in fy 11-12, can i claim TDS of Rs.2.5 lacs in fy 11-12 bec as per your opinion, this income is to be accounted in fy 12-13

Amol S Joglekar

Amol S Joglekar (Expert)
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19 September 2012 You need to claim the same in return because Govt of India follows cash system of accounting.

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