Guidance in filling balance sheet in itr4 for consultant.

ITR 1279 views 6 replies

Atul Arora

None

67 Points Joined July 2014

I'm filling ITR4 again in response to IT notice. I need urgent guidance in filling 'Balance Sheet' section. My only income is 'sale of services'.

To explain my situation, I start from P&L section in ITR4.In this P&L section, the "Balance carried to balance sheet in proprietor's account" is 7 lacs(sale of services is 8 lacs and total professional expenditures amount to 1 lac).

My 'bank balance' is 4 lacs and 'Cash in hand' is 0.5 lacs.

I have incurred household expenses of 2.5 lacs in the financial year and I want t account this. If I do not account this, the credit and debit will not match in BS. This is my personal expenditure like school fee of children, ration etc. I do not have separate bank account for consulting income purpose.

Please tell if the below are correct entries as per ITR4 or else, please list from your side:

Proprietor's capitol(Sourcses of Funds - 1a) - 7 lacs(I have taken from P & L balance)

Cash-in-hand(Application of Funds - 3iiiA) - 0.5 lacs

Bank Balance(Application of Funds - 3iiiB) - 4 lacs

Miscellaneous expenditure not written off or adjusted(Application of Funds - 4a) - 2.5 lacs (using this field for my household expenses).

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Also, please tell me what is the field "Profit and Loss account/Accumulated Balance" field meant for and if needs to be filled in for my case.

I'm running out of time to reply to the notice.

Replies (6)

Manish Hingar

Financial Consultancy

267 Points Joined March 2015

Hello Atul,

First of all, if you dont have books of account you can file it into ITR 4S, where you can do it on presumptive basis, but if you want to file ITR 4 itself, you can consider those expenditure in p&l only because showing them as ficticious asset wont work out, basically you can not get benefit of personal expenditure in business but if you want to do that show it in p&l and carryforward reduced net profit to your capital account in that case it will tally.

CA. Roopali Kadam

Jobs on assignment basis.

1481 Points Joined December 2009

Manish Sir,

It can be shown as

Prop Cap= 4.5L (7L - 2.5L withdrawals) ?

Atul Arora

None

67 Points Joined July 2014

Dear Manish,

Thanks for your answer.

1. I need to file ITR4 for reasons of specified profession.

2. I do not intend to reduce the tax amount. Besides, using the ITR utility I see that the entries in BS does not impact the tax amount.It is the P&L entries that count. I want to file the balance sheet correctly so as to avaoid another round of communication with IT folks.

In my view the credit and debit sides in BS need to balance.

I have 7 lacs on proprietor's capital in sources side.

My bank balance would have been 7 lacs as well if I had kept the amount in a separate bank account for professionl dealings. However, the balance (on Mar 31) reduced since I have made withdrawals. If I show only the bank balance (+ cash in hand) the credit and debit sides will not tally.

I'm running out of time and need guidance. If I can be shown the entries that I need to fill out in the ITR4 form in BS for my situation, I will be grateful.