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Advance from customers-Private company(Acceptance of deposits)?

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Advance from customers-Private company(Acceptance of deposits)?
posted Jun 16, 2017 by Tanmay

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1 Answer

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Deposit includes any receipt of money by way of deposit or loan or in any other form, by a Company. However Section 73 provides certain amounts which would not be considered as Deposits which inter alia includes below point.
1. Any amount received in the course of or the purpose of the business for the following:-
a. As advance for the supply of goods or provision of services provided such advance is appropriated against supply of goods or provision of service within 365 days from the receipt of such amount,
b. As advance received in connection with consideration for property under an agreement or arrangement,
c. As security deposit for the performance of the contract for supply of goods or provision of services.
d. As advance received under long term projects for supply of capital goods.

If any amount received under clause (a), (b) and (d) becomes refundable due to the reasons that the company accepting money does not have necessary permission or approval to deal with the goods or services then the amount received shall be deemed to be a deposit after the expiry of 15 days from the date they become due for refund.
Thus looking at the above provisions the answer for your question would be that amount would be considered as Deposit.

answer Jun 17, 2017 by Naveen Kumar
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