payment exceeding Rs.20,000

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This query is : Resolved

Viral Jani (Querist)

19 May 2008 one company doing transpot business on contract basis, When they got contract for sending goods it make sub-contract against contract for sending goods to destiy with lorry owner and for which it become mentetory for him to make payment in Cash to driver for petrol and fro other expenses and after wards they have no contact with party and further he got lorry which is available at the time of sending the goods which is chipest.

Here many time the payment made to driver exceed 20000

whether it is disallowe U/S 40A(3)?
Whether it cover under exception under rule 6DD as tradition of the business?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

20 May 2008 This will be covered by 6DD if the case falls in the following category.

k) where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person;

i) where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Act, and when such employee -

(i) is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship; and

(ii) does not maintain any account in any bank at such place or ship;