Sowmya S (CAO) (214 Points)
04 July 2012Dear Sir/Mam,
We have to make a payment to building constrcutor of our upcoming factory, can we make payment of Rs.10,00,000/- by cash?? As it is a capital expenditure, can we make payment by cash? whether Sec.269SS of It Act will attract?? plz clarify my doubt.
Sunil Kumar V.Peruru
(Associate Consultant)
(28 Points)
Replied 04 July 2012
269SS applies to Financial Transactions like borrowing or lending money, more in the nature of loans. But trasaction mentioned here is not in the nature of loan . It is a transaction in the normal course of business. Hence 269SS has no relevance.
Sowmya S
(CAO)
(214 Points)
Replied 04 July 2012
Thanks a lot Mr.Sunil Kumar V.Peruru,
so do u mean to say that we can pay Rs.10,00,000/- by cash, it wont be disallowed...
P.Ramasamy
(Propreitor)
(21 Points)
Replied 17 July 2012
Ms.Sowmya.S.,
Sec 40A(3) - Cash Payments in excess of Rs.20,000 - 100% disallowed subject to exceptions given in Rule 6DD - Obviously the disallowance is with respect to REVENUE EXPENDITURE sought to be claimed as a deduction while computing income under the head "Profits & Gains of Business or Profession".
Capital Expenditure - which cannot be claimed as a deduction u/s 30 - 37 - is outside the purview of Sec 40A(3).
Sec 269SS - Prohibits the Recepient from accepting cash greater than or equal to Rs.20,000 by way of any loan or deposit otherwise than by an account payee cheque or account payee draft. Penalty for failure to comply with the provsions of Sec 2699SS is given u/s 271D which is equal to the amount of loan or deposit accepted.
Sec 269T - Proibits repayment of any loan or deposit in cash greater than or equal to Rs.20,000. Penalty for failure to comply with the provisions of Sec 269T is given u/s 271E which is equal to the aount of loan or deposit repaid.
I hope the above clarifies your query regarding allowance/disallowance of expenditures/payments in cash.
regards
CA.P.Ramasamy
CAclubindia
