D.TAX
This query is : Resolved
25 August 2021
XYZ is a legal entity, is registered under Societies Registration Act 1860 and under sec 12A
Of in-Come Tax Act1961.
The present concern is to identify to determine whether Sec 40A (3) regarding limitation for
Cash payment is applicable to M/S XYZ or not.
Sec 40A (3) links with the term “Expenditure” so cash payment limitation
Is applicable only for the cash payment transactions, booked under the head of any
Expenditure
Let us take a situation as under
1) M/S XYZ pays INR 15000 as ADVANCE to an employee (Mr. RAHUL)
For running the Canteen.
2) Out of the above-paid amount, Rahul pays INR 7000 to grocery supplier,5000 to
Vegetable vendor, and INR 3000 to milk supplier
Then Rahul submits the above payment voucher to Accounts Dept. for adjustment
And the settlement of his advance account
Here a question arises, whether the above payment in cash as per Sl No 01
Is permissible as per 40A (3)
Of in-Come Tax Act1961.
The present concern is to identify to determine whether Sec 40A (3) regarding limitation for
Cash payment is applicable to M/S XYZ or not.
Sec 40A (3) links with the term “Expenditure” so cash payment limitation
Is applicable only for the cash payment transactions, booked under the head of any
Expenditure
Let us take a situation as under
1) M/S XYZ pays INR 15000 as ADVANCE to an employee (Mr. RAHUL)
For running the Canteen.
2) Out of the above-paid amount, Rahul pays INR 7000 to grocery supplier,5000 to
Vegetable vendor, and INR 3000 to milk supplier
Then Rahul submits the above payment voucher to Accounts Dept. for adjustment
And the settlement of his advance account
Here a question arises, whether the above payment in cash as per Sl No 01
Is permissible as per 40A (3)
23 September 2021
No. As Rahul is just employee, and bought goods for canteen from different vendors.
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