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Can bank statement act as expense proof?

Tax queries 565 views 10 replies

I was doing business with my partner. I used to trasfer around 50,000 rupees every month to my partner. I have trasferred around 4 lakh so far. All the bills like Office rent, electricity bill, phone bill etc., are in my partner's name. But he has not invested any money.  My personal income from April 1, 2015 to March 31, 2016 crosses 17 lakhs INR.  

So can I show my bank statement as expenses while filing Income Tax?  There was also hand to hand money transaction where I used to give him money directly. What should I do for that while filing tax?

Your help is much appriciated.

Thanks

 

 

Replies (10)

my bank statment means u want to say that in ur personal name ??

normally partnership firm's expenses are incurred from bank A/c in the name of parnership firm so as to get the deduction easily......

Jacky,  It was not partnership. But was a private limited company. This was my first company and I didn't have much experinece with running the business. We didn't have any company bank account at that time. So I have used my personal account for company related expenses.

so means u r promoter of the company......& ur partner (as u mentioned earlier) is also another promoter of the company......

so expenses can be divided between

1) Pre-incorporation expenses

& 2) post-incorporation expenses........

pre-incorporation expenses are incurred from ur personal bank a/c &

post-incorparation exp. from the Co.s bank A/c

am i right ??

I'm not sure what you mean Promotor. I'm new to that that term. In Private Limited Company, I'm being called as a Director. Also a shareholder. 

I have incorporated the company on July 2014.  But we have got the bank account only on August 2015. I mean after 1 year. 

I'm not talking about Pre-incorporation expenses here since thats already covered in my last year tax filing. And yes I have used my peronsal account for that expenses.

As for post incorporation expenses, I have used my personal account till August 2015.  Me and My partner done business together from Feb 2015 to September 2015.

We have used Company bank account only for Sep 2015 expenses. For the rest 7 months, I have used my personal bank account

  

Condition for allowance under section 37

Expenditure should not be of capital nature.....it should be revenue in nature which is office rent, electricity & phone bills etc in ur case........ hence allowable..

The expenditure should be incurred during the previous year...

The expenditure should not be of personal nature.........if u can prove that even though incurred from ur personal bank a/c at that tym it is not of personal purpose exp....

The expenditure should have been incurred wholly or exclusively for the purpose of the business or profession....

The business should be commenced.......

 

Thanks Jacky for your explainations.

Now I would be happy if you answer my main query.

Do I have get any signature on paper that says my partner received money from me for these expenses or just bank statement is enough?

Do I have to pay taxes for hand to hand transcations since I don't have any records?

other partner is also director in this pvt ltd co. ??

if in bank statment it reflects the name of ur other partner(or director) then well & good otherwise take any steps to prove the genuineness of the transactions...

kindly refer section 44A for compulsorily maitenance of books of accounts & records.......

Yes Jacky, my partner name is there In my company bank account. 

kindly refer section 44A for compulsorily maitenance of books of accounts & records.......

can you give me the link?

Thanks
 

https://www.incometaxindia.gov.in/_layouts/15/dit/pages/viewer.aspx?grp=act&cname=cmsid&cval=102120000000036952&opt=&isdlg=1

 

refer above link for "Thereshold limit" to decide whether books of accounts are compulsorily to be maintained by u or not ....

& name as per bank statment is a director in co. at present that also to be proved........

Thanks for your time Jacky. You have been very helpful. 


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