Cash payment above 20000 to directors

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Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2012 A director is being paid Rs. 25000/- every month in cash. Is it allowed u/s 40(a)(3)?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 December 2012 What is the nature of the payment? If the company wants to claim it as a revenue expenditure, then it will be disallowed.

Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2012 The director is the promoter director of the company. The director right has given loan to the company. Also as per the officials they would adjust that amount as salary to director at the end of the year.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 December 2012 1. If it is a repayment of loan, it is a violation of Section 269T and penalty equivalent to the amount of payment shall be levied.

2. If the amount represents salary, then it shall be disallowed u/s 40A(3).

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Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2012 Thanks Sir

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 December 2012 You are welcome. You should use the thanks button to convey your thanks.

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