Interest disallow

This query is : Resolved

munish (Querist)
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10 August 2012 I WISH TO DISALLOW INTEREST EXPENDITURE IN TUNE OF SURPLUS MONEY ( CASH IN HAND ) , CASH NOT UTILIZED FOR ANY PURPOSE BUT INTEREST PAID TO BANK. CAN ANYONE TELL ME IN WHICH SECTION I DISALLOW INTEREST AND CAN IT MENTIONED IN 3CB.

CMA Nishad Patkar

CMA Nishad Patkar (Expert)
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11 August 2012 Any Payment made excess of Rs. 20000 otherwise than by an account payee cheque or an acount payee demand draft is disallowed U/s 40A 3. However, Rule 6DD prescirebed certain circimstances where such expenditure is allowed for deduction. Hence as per Rule 6DD, any payment made to RBI, Commercial banks in public/private sector, co-opBanks etc.
However, if you wish you can show in Clause 17(h)(B).Read Section 40A(3)-- In form 3CD

CA VISHNU GAVKARE

CA VISHNU GAVKARE (Expert)
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11 August 2012 Dear Munish,
It is not necessary to use entire cash taken from bank without keeping any cash in hand. Certain cash in hand is always required in business. It shall be disallowed only if retaining such amount is not justifiable. in such case no specification is there but it will not be allowed u/s. 37(1) because of which it will be disallowed.

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