One of the our client company has purchased some material from its supplier. Supplier of the company has issued an standing instruction letter to the Company to make payment to their creditors on their behalf. Accordingly my client has paid the money to third party as per instruction letter of the supplier. Does such arrangement is allowed in income tax and other government regulations. Please quote some case laws or notification if available.
Yes. It is OK. Not a problem. But take ledger confirmations. This is allowed for trading assets or liabilities. Same cannot be done for loan repayment transactions.
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