Sales Tax dues converted to Misc. Income

Stat Audit 828 views 2 replies

Jay Chakraborty

Section Officer

127 Points Joined April 2009

One company following its accounting manual (not accounting policy) transferred old sales tax demands to miscellaneous income. However, it cannot submit the detailed analysis on the basis of which such adjustment was made. The manual,too, strictly stated that such conversion is to be considered judging the merit of each case. But as of now no such details were not furnished. What to do?

Replies (2)

Ashish M

Chartered Accountant

2731 Points Joined January 2008

Sales tax demands, if in any proceedings, held and decided in favour of assessee and the assessee has got the money back, can very well be deemed income of the assessee.

But if the dept. has made further reference to the higher authority wihout actually paying off the amt. to the him, then the asssessee can't deem it as his income.............

But if the case is still subject matter of an appeal, such can't be written off and credited to the accounts as such.!!!!!!!!!!!!

Jay Chakraborty

Section Officer

127 Points Joined April 2009

In this case, sales tax authorities have issued demand notice for such amount and yet to be paid or appealed by the Company. Instead of doing so, it has recognized the same as misc. income.