Cash tranactin

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Satyanarayan (Querist)
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05 October 2011 Dear Sir,

Would like to know that is cash transaction permissimable from company to company .

if the parent co incurres the expn in cash for formation of the other company and incurres expn in cash what will be the accounting treatment will be given

CA PRAVIN

CA PRAVIN (Expert)
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05 October 2011 Formation expenses are covered by section 35D. Parent company can incur expenditure for formation of subsidiary co. in cash.

In the books of subsidiary co. the company formation exps will be shown under Misc Exps in Asset Side.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 October 2011 Section 40A(3) provides that cash payments made in excess of Rs. 20,000/- will be disallowed.

CA PRAVIN

CA PRAVIN (Expert)
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05 October 2011 I think 40A(3) applies to expenditure in revenue nature. We are not debiting the whole company formation expenses to P&L account. We are debitting to P&L in 5 years equally.

I think this case will not attract 40A(3).
Plz update me if I Wrong.

Satyanarayan

Satyanarayan (Querist)
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06 October 2011 Dear all
Thanks for the suggestion , but can the parent co debit to the subsidary co in cash payment .

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