We have hired a office place at Rs. 50000 from the XYZ party. Amount is recoverable from the XYZ party is Rs. 10 lacs. Contract made between parties that monthly rent to be adjusted against receivable amount (rs. 10 lacs). service tax payble as per govt rules.
Now question is that, whether we can adjust service tax amount (Rs. 50000+ Rs.6000 s.tax) = Rs. 56000 from the receivable amount and xyz party in turn deposit service tax amount to goverenment. Or we can adjust Rs. 50000 (rent amount) and pay Rs. 6000 service tax amount which will be deposited by xyz party.
Please reply in accordance with the provision.
CAclubindia
