Cash Payment.

This query is : Resolved

Manoj Kumar (Querist)
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24 July 2008 Dear Sirs,

Please reply following queries in purview of Sec. 40(A)(3):

1.)If a co. pays advance to its employees for expenses in cash more than 20000 in a day and debits it to Advance A/c then is this expense allowed under income tax?

2.) If a co. pays advance to its employees for expenses in cash more than 20000 in a day by single voucher and debits it to Advance A/c then is this expense allowed under income tax?

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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24 July 2008 Yes, it is alloable as the same is not the expense incurred by the company. It is only advance which shall appear as an item of Advance recoverable or adjustable on the production of a/c.

Manoj Kumar

Manoj Kumar (Querist)
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24 July 2008 Dear sir,
Thanks for your reply.

What about if cash more than 20000 is paid through a single voucher?

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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24 July 2008 Then also it will not be a disallowable expense. Refer Rule 6DD(k), which covers agent who is supposed to pay cash for goods or services. The employee also represents its employer as an agent.

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