01 June 2009
If a company made advance payment to his emloyee in cash for Rs.3 Lacs, Employee deposited this sum in his personal account and made payment for expenditure exceeding Rs. 20000 on behalf of company through account payee cheque from his personal account.
Whether Provision of section 40A(3) shall apply to company? or expenditure will allow to co.?
01 June 2009
Please note, from the point of view of company you have paid this by a/c payee chq. & employee has given the statement for that.
As per my view it should be allowed, the base amount amount is paid to employee, for expenses. As he has given the statement for expenses & company has booked so by j/s in the books & balance amount recovered from employee if available.
01 June 2009
It is complex treatment you are doing...I think you should first transfer Rs.300000/- in separate Account like suspense and should not show advance to employee.The cash given to ur employee will not change the total cash balance of ur concern and then start to transfer the amount from suspense to expenditure account when they are incurred.
CAclubindia
