11 October 2007
It is not Allowable and Please do not make any payments in Cash it is advisable to pay by Crosed Cheque. Such Expense paid in Cash > 20K will be disallowed
12 October 2007
You have told cash payment of Rs.20000/. Assuming it as an expenditure which will be debited to Profit and Loss Account, Section 40 (A)3 is attracted and disalloance comes.
But if the payment is in the nature of Balance Sheet item say Salary advance or something like that, then 40(A)3 is not attracted. The word " Expenditure" needs special attention in your case.
12 October 2007
One more doubt regarding these issues. If advance paid to staff as a balance sheet item aganist that reimbursement of expenses is coming out from that particular advance is exceeding Rs. 20000/- will it be an allowable expenditure mr.Ravichandran sir.
12 October 2007
In accounting parlance, advance paid to a expenditure item, automatically falls under Balance Sheet category. So, though the salary is a expenditure item, the Advance paid on that salary is not an expenditure item ( my view).
So, in my opinion, salary advance is not a P & L item and hence do not attract 40 (A)3.
CAclubindia
