Tax

Sir,



(a)(i)

Ours is a company which is engaging in dealing with foodgrains.As one of our customer is in rajasthan we use to send the goods to him via transport.However the transport expense is incurred by us initally which is latter on reimbursed by the the purchaser.As the freight expense is actually reimbursed we don not use to deduct tds u/s 194C.

Is this correct??



(a)(ii)

Further the accounting treatment done by us is by debiting the receivable account(purchaser) and crediting cash/bank account.

Is this effect correct??



(a)(iii)

However our tax consultant is of opinion that we should debit the freight account while actually incurring the expense and create a separate head under p&l account of freight reimbursed which is to be credited when freight is received.



(a)(iv)

Further as we have not deducted tds on freight, such expense will be disallowed and however the freight reimbursed account(which is being credited when freight is reimbursed)should be added to our income for tax calculation purpose

is this effect correct



Kindly respond to the above queries and pl. give reference of any case law relating to this if possible...