Foreign PO..SUPPLY REJECTION

An Indian parent company has rejected a supply from its US subsidiary due to specification issues, intending to reclaim purchase prices. This raises questions about the accounting treatment, tax implications, and customs disclosures required. The advice suggests keeping the purchase order outstanding and disclosing the reason if it's filing time, or simply recording the return of any advance payment. Rejection implies a pending status, whereas cancellation would necessitate derecognising the purchase.