Withdrawl of profit share in cash

This query is : Resolved

Pritom Baruah (Querist)
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18 September 2014 Sir
A partner wants to withdraw his profit share in cash from his partnership firm. Is this allowable or disallowed under sec 40A(3)

CA Devanand Jethanandani

CA Devanand Jethanandani (Expert)
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24 September 2014 Dear Pritom,

Section 40(A)3 provides expenditure in respect of which payment is made in cash exceeding Rs.20,000/- shall not be allowed as deduction.

While in present case, share of profit is not expenditure, it is only appropriation of profit, hence according to my view the said section is not applicable here.