Section 40a(3) - Cash Payment above Rs. 20000
This query is : Resolved
15 June 2011
Hi
I have come across a interesting case wherein I wants to take your opinion.
Case: One construction company having various construction sites wherein site-in-charge have been appointed for dealing day-to-day expenses of the concern site. The company is transferring required amount of fund to their account for meeting expenses.
What I observed there that for avoiding cash payment above Rs. 20000, site-in-charge is making payment by issuing account payee cheque from his personal account to parties.
I wants your opinion whether this practice is legally allowed to avoid cash payment exceeding Rs. 20000 or whether it still attracts section 40a(3)for company.
Apart from the income tax, Is there any other non-compliance on the part of company.
I have come across a interesting case wherein I wants to take your opinion.
Case: One construction company having various construction sites wherein site-in-charge have been appointed for dealing day-to-day expenses of the concern site. The company is transferring required amount of fund to their account for meeting expenses.
What I observed there that for avoiding cash payment above Rs. 20000, site-in-charge is making payment by issuing account payee cheque from his personal account to parties.
I wants your opinion whether this practice is legally allowed to avoid cash payment exceeding Rs. 20000 or whether it still attracts section 40a(3)for company.
Apart from the income tax, Is there any other non-compliance on the part of company.
18 June 2011
Company is required to deduct tax at source if the payment is made to any work contract or any other payment which attracts TDS rules.
Apart from this as such the practice is not wrong, as we have observed whenever employee goes on travel for company purpose, the employee makes the expense and same is reimbursed by the company. However, how the company is considering this advance given to the site in charge is to be considered.
And what type of payments are made are also to be considered, as whether it is for freight then service tax liability is on company and if payment for contract then TDS rules, etc
These are my views. Experts are invited to correct it.
Apart from this as such the practice is not wrong, as we have observed whenever employee goes on travel for company purpose, the employee makes the expense and same is reimbursed by the company. However, how the company is considering this advance given to the site in charge is to be considered.
And what type of payments are made are also to be considered, as whether it is for freight then service tax liability is on company and if payment for contract then TDS rules, etc
These are my views. Experts are invited to correct it.
19 June 2011
For Section 40A(3)the relevant issue to be considered here is-
1. Whether the payments made by the company to the site-in-charge are as per the requirement of Section 40A(3)?
And,
2. Whether the payments made by the site-in-charge to the respective parties are as per the requirement of Section 40A(3)?
In both the cases cheques are issued to Payees Account.
In my view , expenditure can not be disallowed under section 40A(3).
1. Whether the payments made by the company to the site-in-charge are as per the requirement of Section 40A(3)?
And,
2. Whether the payments made by the site-in-charge to the respective parties are as per the requirement of Section 40A(3)?
In both the cases cheques are issued to Payees Account.
In my view , expenditure can not be disallowed under section 40A(3).
19 June 2011
In case payments are made after considering the applicable TDS and Service Tax provisions, and later the company fulfills its obligations related with TDS & ST, I think, there remains no objectionable issue with the tax authorities.
As far as compliance is concerned, it is always remains incomplete. The important thing is how we represent the case in a particular situation.
As far as compliance is concerned, it is always remains incomplete. The important thing is how we represent the case in a particular situation.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- SEC 54 OF IT ACT
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Where to show the RCM on Rent paid to unregistered landlord
- Is Aadhar PAN linking required for opening bank account?
- Form 26QB for TDS on property
- Residential status for filling income tax returns in India
- GST Annual Returns filing due date
- DTCP approval
- Partnership Business Can start India (two partners one is Indian and OCI both are wife and Husband)
- BLOCKED-INELIGIBLE GST CREDIT
- Strategic Performance Management and Business Valuation
- Appeals vs Writ court -certain doubt
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding Resignation by Auditor from Pvt. Ltd.
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
