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Cash restriction

Tax queries 238 views 6 replies

We are a Partnership Firm, recently we have Purchase a Land  to our FIRM Name through Cheque . But Rs. 2,10,150.00(Appro.) Stamp Duty Charge  & Rs. 35000.00( Miscllaneous fee , Plan ,Quary etc. all for Department Expenses)  paid in Cash.

Now our Question is How to show this transaction because as per Income Tax rule Daily Cash Restriction Rs. 10000.00 .

Replies (6)
As per Sec 40(A)3 its resrricted upto rs.10000 , spread the expenses upto 3 days.cheque issued for purchase of land.

Note that Land Purchased  by cheque only . But  Stamp Duty & Govt other Misc. Fees paid in cash.

The amount of stamp duty paid of Rs. 210150/- will be disallowed. However as per Rule 6DD, where the payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender, then the stamp duty charges paid to Government can be allowed.

The Rs. 35000/- also can be allowed if it is paid to the Government and the Government department wanted the payment to be in legal tender (cash).

The above opinion is based on a very wide interpretation of the exceptions to sec 40A(3). The worst case is that all the expenses paid in cash will be disallowed.
Stamp Duty of Rs.2.1 lacs will be disallowed expenditure.

 Actually we have paid cash to  Third Party   Rs. 210150.00 for Stamp Duty & Registration Fee Purpose and Third Party  through GRIPS vide his (third party SBI Bank) Payment this Duty to Goverment of West Bengal  Dirrectorate of Registration & Stamp Revenue Departmnet  in our Comnapny Name .  It is allowable in Income Tax for daily Cash Restriction ?

 

Payment to Govt in Cash is allowed under Rule 6D.


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