Advance expense

This query is : Resolved

girish (Querist)
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16 November 2007 I have paid CASH advance towards expense Rs.1,00,000 and now booking the expenses.
The individual expenses are above Rs.20,000
will this be disallowed ?

R.V.RAO

R.V.RAO (Expert)
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16 November 2007 THE DISALLOWANCE IS FOR CASH EXP. BUT NOT FOR CASH ADVANCES.
SAME DAY FOR SAME PARTY THE CASH EXP. CANNOT BE MORE THAN RS. 20000.THEN THERE IS NO DISALLOWANCE.
YOU MAY MANAGE ACCORDINGLY. THE INDIVIDUAL CASH BILLS WILL HAVE TO BE ARRANGED SUCH THAT THEY ARE BELOW RS. 20000 EACH FOR EACH DAY AND FOR EACH PARTY.HOPE YOU CAN DO THAT.
REGARDS,
R.V.RAO

girish

girish (Querist)
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16 November 2007 Thank you

KAAPIL

KAAPIL (Expert)
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16 November 2007 Thanks Mr. Rao.

girish

girish (Querist)
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17 November 2007 If a party issues one consolidated bill of Rs.30000

Note : repairs charge : 10000 on day 1
maintainance : 10000 on day 2
other charges : 10000 on day 3

in this case disallowance attracts ?

o.velavan

o.velavan (Expert)
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18 November 2007 I feel that Sec 40A(3) is attract for advances also.Purpose of introduction of Sec 40A(3) is to curb the cash payment in excess of Rs 20000/

Even if you make the payment one day befoe the bill date it may also advance.In this way the purpose of the Section may be defeated.I feel that, appellate authorities may not accept your view.

My view has also reflected in Direct Taxes Ready Recknoer by G.Sekar FCA-page 146

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