payment of advance to director in cash

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vandana (Querist)
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05 November 2008 If an advance to a director is paid in cash of a sum exceeding Rs 20,000.00, for the expenses that he incurs on a business trip, will it be disallowed u/s 40A (3).

Also, if expenses are reimbursed, the reimbursement being more than Rs 20000 in cash will the expense be disallowed?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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05 November 2008 If the payees are different and expenditure are different each less than 20000, then it will be viewed within limits. Book them as such

vandana

vandana (Querist)
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06 November 2008 suppose A is the director, and takes Rs 40,000 in cash as advance for expenses, then wat will be the treatment?

Sanjay

Sanjay (Expert)
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06 November 2008 What is relevant is the quantum of expenditure that is booked. In case the expenditure booked against this advance is, say 25000/- then it will get disallowed.

In case the expenditure booked against this advance is 15000 and balance is returned then the expenditure will be allowed

vandana

vandana (Querist)
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07 November 2008 If the expense is booked in the following manner :-
1. telephone - Rs 18000
2.Travel - Rs 22000
thetravel expense is incurred to-& - fro, so will it still be disallowed, as the expense was incured on 2 diff dates.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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08 November 2008 Then 18000 will be allowed and 22000 will be disallowed.

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