Tds

This query is : Resolved

SRINIVASA RAO P (Querist)
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01 September 2013 I MADE A PAYMENT OF Rs. 20000/- by way of Cash TO AN AGENT towards Commission without deducting TDS.The entry is :

Commission A/c .... Dr. Rs. 20000/-

to Cash A/c Rs. 20000/-

Since commission payments attract TDS u/S 194 H of Income Tax Act , I enhanced the payment amount by Rs.2222/- (being TDS PORTION) by way of Journal Voucher entry as shown below.

Commission A/c .... Dr. Rs. 2222/-

to TDS Payable A/c Rs. 2222/-

So the total amount paid towards Commission is Rs. 22222/- (including TDS of Rs.2222/-) which is debited to P & L A/c.

Now my query is :

Whether the total payment of Rs. 22222/- will be disallowed under Section 40 A (3) OR NOT ? (Being payments made in cash in excess of Rs. 20000/-)

If disallowed why ?
If not why ?

This is only one if the instances I am citing.

Please clarify