Is 40a(3) applies for advance
This query is : Resolved
24 October 2013
HELLO, I am in a tax audit of a private company, this company had paid more than 20000 as ADVANCE for travelling to foreign in foreign currency, than this 40a(3) applies?? and also advance is not an expense, so can you please help me
24 October 2013
On first look it should not. But if you really see, you have paid in advance for expenses to be borne on a later date which will hit your P&L. So be prudent while deciding on such matters.
24 October 2013
40A(3) doesn't attract.
Courtesy:- 'Issues on tax audit' and ICAI publication.
Courtesy:- 'Issues on tax audit' and ICAI publication.
24 October 2013
Advance if are converted to exp later and is debited to profit and loss a/c in foriegn currency still will not be attracting sec 40A(3).
24 October 2013
Well, I prefer to follow judgments of the courts instead of ICAI publications which often land the assessee in soup later on.
Please refer to the following judgments wherein advances (for revenue expenditure) were disallowed:
Kejriwal Iron Stores v. CIT [1988] 169 ITR 12 (Raj.)
Nathalal Jethalal.vs Commissioner Of Income Tax. 99 ITR 757
Vijay Kumar Ajit Kumar. vs Commissioner Of Income Tax. 191 ITR 391
In Vijay Kumar, while ruling in favour of the revenue, it was held that "Whether the payment is made prior to delivery of goods or after delivery of the goods, it is payment in cash and it is payment of consideration for the goods."
Please refer to the following judgments wherein advances (for revenue expenditure) were disallowed:
Kejriwal Iron Stores v. CIT [1988] 169 ITR 12 (Raj.)
Nathalal Jethalal.vs Commissioner Of Income Tax. 99 ITR 757
Vijay Kumar Ajit Kumar. vs Commissioner Of Income Tax. 191 ITR 391
In Vijay Kumar, while ruling in favour of the revenue, it was held that "Whether the payment is made prior to delivery of goods or after delivery of the goods, it is payment in cash and it is payment of consideration for the goods."
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Supply through E-commerce Operators
- STCG....................................................
- TAN for Partnership
- Sales return eway bill
- AMOUNT RECEIVED UNDER COMPULOSRY ACQUISITION OF AGRICULTURAL LAND
- Relief u/s Section 89
- GST ON DAMAGED GOODS
- Specified Profession
- Loan by Partnership Firm
- LTCG for Assmt year 26-27
- Section 54F - Exemption on LTCG in 2026 for HP purchased in 2023
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- Nomination of Bank for refund in itr 2
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
