Regarding sec. 40a(3)

This query is : Resolved

CA_UDIT (Querist)
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14 February 2014 I want to know whether the following expense will be allowed to my assessee(partnership firm) in the following case:-

My assessee's employee has made an expenditure of Rs.25000/- in cash through his imprest account.
Also the firm gives him only account payee cheque for his imprest.

Now whether this case will attract the disallowance of sec 40A(3)of Income Tax Act 1961.

Nikhil Kaushik online

Nikhil Kaushik online

(Expert)
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14 February 2014 i believe it should be disallowed...the idea of 40a(3) is to avoid cash expenditures which are difficult to trace. here the imprest account should get covered under the provisions of 40a(3).

CA_UDIT

CA_UDIT (Querist)
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14 February 2014 Thanks for responding...but from another point of view it is mere a reimbursement by the assessee to his employee..also firm has given account payee cheque only.

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