CA. jalpesh vaghela (B.COM, F.C.A) (112 Points)
08 August 2013ALL,
If i have paid any expenses during the year above 20,000/- & than prepaid the same by say 15,000/- whether the same will be disallowed or will be admissible expenses.
For ex. Insurance paid in Feb amt to Rs. 30,000/-& prepaid entry i have done amt to Rs. 25000/- whether the expense to be disallowed or not !!
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 08 August 2013
Dear Jalpesh,
Every transaction needs to be taken separately... and by considering the provisions of Sec. 40A of I.T. Act... you would be disallowed to claim Expenditure u/s 40A(3)...
Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com
+91-9891400405
Dipjyoti Majumdar
(CA in service & CS. dipmaj@ rediffmail.com )
(3468 Points)
Replied 08 August 2013
I differ from your view Lovely. Section 40A(3) deals with expenditures debited to PL account for which deduction is claimed. Here the deduction is claimed for 5,000. I do not think this will be disallowed.
For example if you purchase an almirah in cash for 35,000 it will not be disallowed as it is a fixed asset and 35,000 is not calimed as deduction against business income.
Thanks,
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 08 August 2013
Dear Dipjyoti,
kindly read this:-
40A(3):- Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.
If we believe what you are stating, then kindly tell me, what's the purpose of the words i marked as bold.
darpan chheda
(Accounts Manager)
(90 Points)
Replied 09 August 2013
Agreed with Mr.Lovely.... The emohasis is on the payment made to a person in cash in a single day... The accounting treatment accorded to the transaction at our end will not make any difference. So in My view , the disallowance will be made under section 40 A (3)
CA Bhavin Venugopal
(CHARTERED ACCOUNTANT)
(681 Points)
Replied 09 August 2013
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 09 August 2013
Dear CA Bhavin,
Absolutely... and sorry, if i misinterpreted it... as generally the person asks query on Expense made and repaid on a single day... I think, normally this type of question that expense made over the period.. doesn't arise.... that's why i might got confused...
Anyhow, now, it seems fine what you and Dipjyoti said.
That expense would be allowed... as it is made and repaid during the year.. not on a single day...
CA Varun Arora
(CA)
(286 Points)
Replied 14 August 2013
A Company has paid interest on unsecured loan Rs. 105000/- in Cash ( deposited in his acount ) in three accounts as 40000 in his personal a/c, 40000 in HUF A/c and 25000 in Wife A/c .
Please tell what are the consequences in terms of TDS Deduction and exp. disallowance????
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 14 August 2013
Dear Varun,
all payments made by an assessee in cash (if the loan and interest together = or > Rs. 20000), will be disallowed to an assessee u/s 269T.
But assessee who is not required to get his accounts audited is exempted from the provision of TDS u/s 194A.
CA Varun Arora
(CA)
(286 Points)
Replied 14 August 2013
How we can know that his accounts are audited or not??
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 14 August 2013
Dear Varun,
Sorry... the payment was made by the company... and company is always liable for TDS provisions.. the exemption i was talking about is for individuals...
anyhow, so, the company i.e. your client is required to deduct TDS u/s 194A before making any payment.
Otherwise, the company is in default for TDS provisions also.
Sorry for earlier reply in regards to TDS.
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