Cash Payment in Advance more than Rs.20000

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 February 2011 Hi,
Any body please give me some input on cash payment in advane more than Rs.20,000.

Facts of the case :
1. Entity has paid cash payment for Tour Advance an amount of Rs.1,00,000 and salary Advance of Rs.80,000 and the same is knocked of agains the actual expenditure incurred.

My doubt is could the entity give the cash advance more than Rs.20000 for an revenue expenditure....?

2. Entity has purchased a computers of an amount of Rs.2,00,000 and paid the amount in cash...

Depreciaion on the same is a revenue expenditure.....
Since the above amount is paid in cash, depreciaiton allowable as an expenditure?

Ratan Sharma

Ratan Sharma (Expert)
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03 February 2011 1. Assessee can give the advance in cash there is no restriction as such . But if amount is setoff against revenue expenditure then it will be disallowed if the expenditure is more than Rs. 20,000/-.
It is generally the practice that cash advance is given to employee for tour and after return he submits bills with the employer. If any bill exceeds Rs. 20,000 then it will be disallowed. However advance given to employee is allowable.
Salary advance Rs. 80000/- is converted in salary account of a single person then it will be disallowed.
2. You can purchase the fixed assets for more than Rs. 20,000/-. Section 40A will not apply and it will not be added to your income. Depreciation is different issue. Nothing will be disallowed.

Guest

Guest (Expert)

03 February 2011 If advance given to employee more than 20,000/- for expenses and individual expense paid by employee less than Rs. 20,000/- then there will be no disallowance

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