Reimbursement of electricity expenses

In facility management services Mall charges electricty expenses from shops. The electricity charges is for the payment by the mall on the behalf of shops to electricity board & use of generators. For this mall raise a proper bill. I want to ask that this electricity expense will form part of income or it is to be deductable as expense. and will it be considered for limit under tax audit

 

thanks

Replies (6)

Hi , I am of the opinion that the expenses will  be included in the income and then on payment deduction will be given , and therefore not affecting the overall accounts of the mall. And I also think that it will not be included in turnover for the computation of tax limit , as revenue or turnover is generated from rendering of services or sales of goods as per the  the “Guidance Note on Terms used in Financial Statements” published by ICAI, “the expression “Sales Turnover” has been defined as: “The aggregate amount for which sales are effected or services rendered by an enterprises. The term ‘gross turnover/sales’ and ‘net turnover/sales’ are sometimes used to distinguish the sales aggregate before and after deduction of returns trade discounts”. It is simply the reimbursement . 

 Agree with Mr. Goyal.It will  treated as  income and not to be subjected with the turnover.

sir why the electricity receipts to be treated as income.

Fully agreed with Mr. Goyel.

Further answering to your second query Deeraj ji, It should not betreated as DIRECT INCOME it should be treated as INDIRECT INCOME. On the other hand as INDIRECT EXPENSES

It is to be done as to show the Accounts "True & Fair" View.

Please correct me if i m wrong.

Pls make the following entry.

(i) at the time of receiveing bill from electricity board.

Electricity Expense A/c Dr.

   To BSES A/C(if in Delhi)

(ii) When we got re imbusement from shop owners

Shop Owner's A/c Dr.

     To Electricity Expenses

At the end of the year if the Balance of "Electricity  Expense A/c " is debit shown underTRADING DEBIT SIDE and if balance is "CREDIT" shown under "TRADING CREDIT' and include with turnover for TAX audit.

Pls rectify meif i am wrong.



thanks to all. 

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