To conclude :-
If firm reimburses,
Disallowed in partner's books
Allowed in company books
if firm not reimburses,
allowed in partner's books (if the partnership deed says that, the partners can spend for the company
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40A(3) disallowance
and in firm's books, no point of allowance or disallowance, because it will show partner as creditor for that amount paid by him.
@ Venkatesh - thank you so much sir...
@ Venkatesh - sir can u please restate last to text so that I can understand better...
As I understand you are saying "initially we pass journal entry for more than 10K and subsequently we reimburse to partner in cash and escape disallowance". It is wrong. If you reimburse the expenses of more than 10K in cash, it will attract disallowance.
You cannot defeat the provisions of the law by playing with Journal entries.
Hope its clear..
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