expenses allowed or not??

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 April 2010 I am working in a construction company.
In the company there is no cash maintain.
so the expenses are paid through bearer cheque to the site manager for the payments of bills..

Say for e.g. there are 10 bills amounting to Rs. 1,00,000/-.
In this case we issue a cheque of Rs. 100000/- in favour of site manager name and he withdraw the cash from the bank and pay the bills.
So in this case the expenses paid are allowed in income tax or diallowed????

Please reply soon and quote any case law (if any).

CA Shiv

CA Shiv (Expert)
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03 April 2010 Hello, it will be disallowed.
There are certain exceptions for not disallowing. Such as when u dont have any bank branch in the site.
Also if you are paying bearer cheque for not paying expense and expense are occuring later and payment made later on than you have to see about the limits of 20k.
For next year to make it easy. Open bank acount at branch site. Give a cheque or transfer the amount and ask the branch accountant to make payment with the cheques or to make payment below 20k.

Querist : Anonymous

Querist : Anonymous (Querist)

03 April 2010 bt sir we received all 10 bills from the site manager.
then after we issue the cheque to the site manager.so none expenses are above Rs. 2ok.

or

if i pass entry in following mannner then what will be your answer.

1. cash a/c dr.
To bank a/c.

2. exp. a/c (individual) dr.
to cash a/c.

CA Gangadhar Mishra

CA Gangadhar Mishra (Expert)
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03 April 2010 practically this is allowed.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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04 April 2010 based on the single voucher is concern.if the single voucher is exceeding Rs.20000/- diallowance is attract. In the construction company it is regular, so ask Site manager provide the vouchers like that