Approval of Invoice at a reduced value

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..... Approval of Invoice at a reduced value
Query (Issue) Started By: - SANJAY MACHE Dated:- 23-12-2009 Last Reply Date:- 23-12-2009 Income Tax
Got 2 Replies
Income Tax
I have raised a bill of 10 Lakh and submitted to client this year. If client approves it at reduced value of 5 lakh in next year. What are the considerations to this effect towards profit/loss? Reply By DEV KUMAR KOTHARI: .....

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..... The Reply: Considering your profile of Civil engineer I deem it fit to reply inspite of lack of complete facts in your query. You must tell about nture of bill, method of accounting, factors of contingency, contractual rights and obligations etc. related with the bill. Assuming the bill is for professional service and If you follow cash basis, then only fees received will be taxable in the year o .....

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..... f receipt. If you follow mercantile basis, then fees, charges accrued will be taxble. For a large gap in bill amount and amount passed by client, justification is required. What has accrued as per contract is important. In case accrued amount is taxed in one year, and then lower amount is settled, unrecovered amount my be discount granted or bad debts, depending on facts and circumstances. These o .....

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..... bservations are are just on some hypothetical basis. In future please send your issue with details, your views, past treatmetn in your case, if any and other relevant information so that you get result of a perfect discussion. Reply By Rama Krishana: The Reply: The wish to say that the views expressed by Mr. Kothari are correct and relevant and like to add that following option may be used after .....

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..... considering the nature of your transactions. Revision of return if the revision period has not been expired. Alternatively claim of bad debts or business loss. All is dependent on Accounting Policy and Accounting Treatment of your tranasctions.
Discussion Forum - Knowledge Sharing .....

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