Payment of Installment in cash

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 June 2010 Sir,
I am a business man and covered under tax audit. I have taken a loan from xyz finance company and due to non encashment of cheque, company wants that I pay Installment of Rs.75000/- in cash (which includes interest also). Can I do so or not.
Whether the auditor will mention this point in his audit report.

Shyam Lal Naik

Shyam Lal Naik (Expert)
Follow

18 June 2010 The repayment in cash is hit by Section 269T. You may consider payment by way banker's cheque/bank draft.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
Follow

18 June 2010 agreed, you should pay it by cheque/draft/payorder.

Upgrade to CAclubindia Pro. Subscribe Now!

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
Follow

18 June 2010 agree

Querist : Anonymous

Querist : Anonymous (Querist)

18 June 2010 Sir, this loan is term loan and it is against vehicle.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
Follow

18 June 2010 it will be allowed in income tax.
Section 40A(3) read with Rule 6DD , exception of section 40 A(3)

Payment to Specified payee Rule 6DD(a)- Where the payment is made to

•(i) Reserve Bank of India or any banking company as defined in section 5(c) of Banking Regulation Act, 1949;
•(ii) State Bank of India or any subsidiary bank as defined in section 2 of SBI (Subsidiary Banks) Act, 1959;
•(iii) any co-operative bank or land mortgage bank;
•(iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949;
•(v) Life Insurance Corporation of India.

i.e you can pay cash agasinst auto loan instalments.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
Follow

18 June 2010 For detailed analysis for payment exceeding Rs. 20000 in cash.

http://www.simpletaxindia.org/2009/12/payment-exceeding-20000-40a3-exceptions.html

Message likes : 1 times

Shyam Lal Naik

Shyam Lal Naik (Expert)
Follow

19 June 2010 The payment does not appear to fall under any of the exception.

The payment is towards loan and interest thereon, and as such, not a question of allowance of expenditure or otherwise.

It is a case of repayment of loan and is clearly barred by Section 269T.

Upgrade to CAclubindia Pro. Subscribe Now!