RTGS - will it be disallowed

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This query is : Resolved

Rahul Ramesh (Querist)

25 November 2010 The firm has remitted an amount through RTGS to the bank account of the creditor.
The entry in the books is
Creditor a/c ... Dr
To Cash A/c

We have come to know that the firm has paid the cash to bank for sending the money as RTGS.
The transaction does not appear in the bank statement.

Will this be disallowed under section 40A(3).

Aditya Maheshwari

Aditya Maheshwari (Expert)

25 November 2010 If the payment is made through banking channels then no disallowance can be made.

Rahul Ramesh

Rahul Ramesh (Querist)

25 November 2010 My doubt is whether it will be treated as direct deposit to bank a/c of creditor.

Aditya Maheshwari

Aditya Maheshwari (Expert)

25 November 2010 I think provisions of 40A(3) will come into play as cash is being paid. But i think if two entries are passed then the purpose may be solved but the same not being reflected in bank statement there is no option for two entries. So disallowable.

Rahul Ramesh

Rahul Ramesh (Querist)

25 November 2010 Thanks
:D

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