Payment on behalf of customer

This is not our expense.  We are getting Commission from supplier.  If customer not paid any amount to supplier, we are liable to pay. This is in agreement. So, i need full explanation.
 

Ok, can u tell expense head? is it allowable expense by Income Tax?

It will be treated as bad debt.

Hence, Bad Debts ....Dr

                  To Customer A/c

Regards

CA Shivani Mittal

As understood  from your query:

since you are not billing your client directly for sale made, you cannot consider it as a baddebts or expenses in your books.

Assuming you work on 10% commission on recovery of sale proceeds you may square off the debt payable by the client against your commission receivable from the supplier.(assuming you account only your commission transactions)