Advances given to staff/employee attracts sec 40a(3) or not?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 March 2017 ABC Ltd is a company providing transport services(Packers&Movers) loading goods at one place and unloading at another place.During the trip drivers may incur expenditure like diesel, Toll Tax, R.T.O exp and other misc for which company provide advances.If ABC Ltd company given advance to driver inexcess of 20,000/-(for example say 36,000/-) on a single day for his on route expenditure (considering A.Y 2016-17) in cash and driver may or may not incur the whole expenditure in a single day. Is advance given by company attracts Sec 40a(3) disallowance ????

Thankyou.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 March 2017 No, it will not attract Sec 40a(3) dis allowance as it is only advance payment. The driver should not make a single payment to a person exceeding 20,000 in a day from the advance taken.

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