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INCOME TAX QUERY.........
The assessee company purchased an asset from its related party. Naturally, the payment is debited to FA account and not claimed as a deduiction from profits & gains of buisness or profession. The Tax auditor wants to report this transaction under clause 18 of Form 3CD under head "Payments to Relatives under section 40A(2)(b). My view is this shoudl not be reported as the payment or expenditure is not claimed as a deduction in computing total income which is the spirit of section 40A. Am I correct
Replies (1)
Please note it not just if exp is debited to revenue or not. It is to be looked on a overall basis whether it relates to BS or profit and loss.
since asset is purchased from related party it needs to be reported.
Also as you know any capital expenditure also incurred in cash for more than 10000 is to be disallowed and debited to profit while calculating taxable income even though it's not charged to profit.
since asset is purchased from related party it needs to be reported.
Also as you know any capital expenditure also incurred in cash for more than 10000 is to be disallowed and debited to profit while calculating taxable income even though it's not charged to profit.
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