Karan Gupta (CA FINAL STUDENT) (414 Points)
09 March 2013Suppose company deposit Rs 50000 in employee account and employee withdraw money from bank and purchase the goods Rs 50000/-.That expense is allowed in income tax or not becoz ultimate payment in cash for that expense
by passing the entry Employee A/c Dr
To cash A/c
and afterthat
Party A/c Dr.
To Employee
CA.D.RAGAVAN
(CHARTERED ACCOUNTANTS)
(219 Points)
Replied 10 March 2013
No. The Expeses will be disallowed. However a cluse in Rul 6DD says
(k) where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person.
An employee necessarily his agent. But the condition that whether required to make payment in Cash for ....... we have to see that condition
Karan Gupta
(CA FINAL STUDENT)
(414 Points)
Replied 10 March 2013
Sir for Purchasing the goods
Entry passed(1) employee a/c dr
To Bank a/c
(2) Purchase A/c Dr.
To Party a/c
(3) Party A/c Dr.
To Employee A/c
In the bill it is specifically written that payment is made in cash i.e above rs 20000
CAclubindia
