Hi,
Can any one tell me the accounting entry for the following.
One of our client which is a Pvt company doing construction business is having its office in a rented premises.our client has given car as a gift to Landlord (i.e Owner of rented building ). How this will be accounted in the books and what are the implications relating to I.T act & etc.,
Hi..
If the car is gifted to the landlord, then the same shall be expensed out in the year of giving gift to the landlord in the books of accounts. But we need to ensure that the same is not getting adjusted against the rent payable to the landlord.
In respect of Income tax, the Assessing officer may contend that the expenditure is not for the purpose of the business of the company and may accordingly disallow as per Sec 37(1). The assessee has to prove that the expenditure is for the bonafide purpose of the business.
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