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cash payment

07 June 2018

whether cash payment exceeding 10000 made from proprietor's capital a/c for personal expenditure is eligible for deduction??

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4 Replies

Jatin (Accountant) (3479 Points)
Replied 07 June 2018

Yes......

Siddharth Goel (Chartered Accountant) (3031 Points)
Replied 07 June 2018

Hi,

As per Section 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 ten thousand rupees, no deduction shall be Allowed in respect of such expenditure, except in the circumstances specified in the section as specific exceptions.

The case of making payment of excess cash than Rs. 10,000 from proprietor's capital account does not fall into the list of those exceptions. Hence, the above mentioned expenditure shall not be allowed as deduction if it is excess of rs. 10,000.

You can refer to the list of exceptions mentioned in Rule 6DD though the following link:

https://www.caclubindia.com/notice_circulars/amendments-to-rule-6dd--5.asp

Also, for more discussions on this related topic, follow the below mentioned link:

https://www.caclubindia.com/forum/cash-payment-limit--442040.asp