In my opinion, it's should be treated as your income and travel charges will be your personal expenses hence no claim for that.
CN Issued under scheme
Iam proprietor of a firm and is registered as distributor with a leading Paint company. I have qualified for a foreign trip scheme against sales achieved. The company has asked that they would be issuing us with a CN of Rs 2.5 lacs & we (My Firm) would in turn pay the travel agency. The travel agency would be issuing us with invoice against travel. My question is :- 1. Will this CN issued on the name of my firm would straight away become my income ? 2. Can this be set off against invoice issued by travel agency?
Asked 7 years ago in Income Tax
Hi,
it is the income of the firm. Just like any bonus or incentives received by an employee is taxable.
but yes you can claim expenses of foreign trip by claiming it as business trip.
1) it will be a income of a firm.
2) yes,it can be set off claiming it as business trip you can also claim boarding and lodging charges, travel expense.
Thanks for answering. But is this company benefited (from tax perspective) doing such transaction and making dealers pay the travel agency? is there specific description of required in the CN?
Asked 7 years ago
Hello,
1. Yes the CN will be the income of your firm.
2. No, it cannot be offset against the invoice of the travel agency as the travel is in the nature of leisure and hence a personal expense.
Regards
Keerthiga Padmanabhan
M.Com., CA, LLB
Hello.
Yes, obviously the dealer benefits out of the transaction as he need not proof the nexus of travel as his business expense in case he receives a scrutiny from the Income Tax Department.
Regards
Keerthiga Padmanabhan
M.Com., CA, LLB
Hello,
1, Yes the CN will form a part of the income of your firm.
2. No the benefit/ offset cannot be claimed.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Hello,
It is easier for him to adjust and prove a Credit Note than making payment to the travel agent and then prove that it was in the nature of business promotion, which may involve litigation cost. So it is any time beneficial and easier for him to get a CN done.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
1) The CN is in the nature of your business income only.
2) The amount paid to the the travel agency can be claimed as a business expenditure, if such travel is attributable to business. If it is purely personal travel, you cannot claim the expenditure.
As CN is additional income, you also need to consider the impact of VAT/Service tax.
Hi,
1, Yes the CN will be income of your firm.
2. No the offset cannot be claimed. It can be claimed only if the trip is for business purpose.
Please feel free to call/revert in case of any doubts
Thanks and Regards
Abhishek Dugar
CA CS B.Com
1. Yes the CN issued in Firm name will be treated as income in hands of the company and cannot be setoff as expenses as the same was for personal purpose and not business expense in your hand.
The company can claim expenditure under promotional expenses.
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