Section 40a(3)

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CA Purvi Rathod (Querist)

13 July 2013 Hi...
This is a query regarding allowability of expenses U/s. 40A(3).
The Company has reimbursed Motor car expenses to an employee amounting to Rs. 21000/- in cash in a single day against one cash voucher , which is debited by the Company under Motor Car Exp. head. Description of Cash Voucher prepared by an employee is as under :
Date : 31st May, 2013
Petrol Exp. for May month -Rs. 13,000
Driver's salary for May month -Rs. 8,000
Total 21,000
Whether this reimbursement would be disallowed under section 40A(3)?

whether your answer would differ if instead of one cash voucher employee prepares 2 different voucher of Rs. 13,000 & 8,000 respectively.
pls clarify the matter at the earliest?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

13 July 2013 The payment is made to the employee as he is in the capacity of an agent of his employer while incurring such expenditures. In my view, the expenditure will not be disallowed U/s 40A(3).

CA Purvi Rathod

CA Purvi Rathod (Querist)

21 September 2013 Thank you sir... but i read some where that employee can't be considered as an agent.

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