Question ID :
44371
shortages in tax audit
Where to show shortages in PL? Whether it is to be directly reduced from closing stock or it should be shown both sides of the PL for the equal amount? such shortages is mandatory as per the nature of business
Posted by
SURAJ KUMAR CHOUDHARY
on
Sep 14, 2022
Filed Under
DIRECT TAXES
Query is not clear. Kindly elaborate.
Posted by
CA. JHA SHANKAR KUMAR on
Sep 19, 2022
Answer ID :
83852
Closing Stock is always what is on hand on the date of closure of books. It is supposed to be physical but not book value. Hence question of deduction will not arise. If shortage, if is material or abnormal if not reflected in books, it will impact Gross Profit of the Unit. Hence, you have to show Loss on debit side of Profit and Loss Account and show the same amount in Credit Side of Profit and Loss Account under Sales or Other Income, whether it is mandatory or not.
Posted by
Rupakula Rajasekhar on
Dec 23, 2022