Expenses with out substantial proof

867 views 6 replies

Mr.R is in the business of supplying of telephones, epabx, projection screens, printers, toners and related activities. They carry the machines in autos to their customer places. As know there is no proof for travelling or delivering in auto. Can ITO or any other official or the auditor question such an expenditure.

Replies (6)

The most convinient way to show such expense is under "PETROL AND CONVEYANCE EXPENSE"... I mean, ITO too understands that such expenses are incurred as the nature of business demands the same..

 

Moreover, if u still want to show it as other expenses, then can show it as "DELIVERY CHARGES"...

 

And as far as my small experience of 3 years is concerned, ITO wont ask proof for such expenses. Everyone knows, rikshawalas never issue receipts...

Dear Praveen,

I asked the same thing from one of my friend. He also said what  Dhiraj has rightly mentioned, AOs rarely objects on the quantum of Conveyance expenses(as long as it doesnt raises suspicion.....).

Normaly they do it on estimation basis like as a parcentage of total expenses or as a percentage of sales or may be a comparative percentages with earlier years.......and if these are more or less same then they go with it.......

 

just make a expenses sheet with ur hand...and get signature of the cashier ( who pays the  amount)...it wil be sufficient to claim the expenses ...ito willl not disallow....they also understand it.....and if he want to dis allow then he disallow a part amount ....not the fulll...........it is common that ito disallows expenses like this i.e. petrol , conveyanance, office etc...upto some extent...even if u bring original bill........so i will suggest u to do the above thing its just enough.........

Dear praveen,

 

 

  1.  A Voucher is the basic document used to support the authenticity  of a transaction entered in the books of accounts.

 

  1. Proper supporting documents should be attached along with the vouchers, wherever possible.

 

  1. Third party vouchers Vs Self Vouchers

      a).  Third Party vouchers are vouchers with supporting documents acknowledging       the receipt of payment from the organisation.

      e.g:  Cash Bill for medicine, petrol, etc.,

 

      b). Self Vouchers are vouchers with no supporting documents for which payment        is attested by the person who has incurred the expenditure. These type of vouchers     should be compulsorily authorized by the management depending upon the   amount involved.  e.g. Conveyance trough auto, loading and unloading charges           paid etc.,

     

      Wherever it is not possible or practical to obtain third party vouchers, self-         vouchers may be used.   In all other cases Third party vouchers should be used.

Regards

K.Ilayaraja.

 

I agree with

vikash rathi.............................

All right thanks for the answers....

See understand that if the amount is not substantial the AO might not get into it.

But imagine around 1000 bills maybe of turnver around 80 Lakhs and conveyance or delivery charges which is Rs.4L wont that be substantial it is almost 20%.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register