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Adjustment of cash given as advance

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This query is : Resolved

Huzefa Tinwala (Querist)

08 April 2015 Dear Sir/Ma'am, if I am giving some cash e.g. Rs. 50000 to my Office Owner as Deposit in a single day. When amount paid to House Owner, amount will be treated as Deposit, hence I guess it may not be disallowed u/s 40 (A)3. My rent per month is Rs. 25000. What happened if, after some month we says house owner to adjust the one months rent against the deposit instead of giving the rent in cash/bank? Is it attract the dis-allowances u/s 40(a)3 of Income Tax?

Kaushik Joshi

Kaushik Joshi (Expert)

08 April 2015 Dear Huzefa,
Are you a person liable for audit u/s 44AB? If yes then you shall also have to deduct TDS on rent u/s 194I since the rent payable by you is more than exemption limit of Rs.180000/- per year.
Also I would recommend you to pay the rent deposit by cheque in order to keep the tranparency of transactions.

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