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Cash restriction

Haren (Accountant) (106 Points)

10 June 2022

We are a Partnership Firm, recently we have Purchase a Land to our FIRM Name through Cheque . But Rs. 2,10,150.00(Appro.) Stamp Duty Charge & Rs. 35000.00( Miscllaneous fee , Plan ,Quary etc. all for Department Expenses) paid in Cash.

Now our Question is How to show this transaction because as per Income Tax rule Daily Cash Restriction Rs. 10000.00 .

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6 Replies

sabyasachi mukherjee (27574 Points)
Replied 10 June 2022

As per Sec 40(A)3 its resrricted upto rs.10000 , spread the expenses upto 3 days.cheque issued for purchase of land.

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Haren (Accountant) (106 Points)
Replied 10 June 2022

Note that Land Purchased by cheque only . But Stamp Duty & Govt other Misc. Fees paid in cash.

Kev Men (788 Points)
Replied 10 June 2022

The amount of stamp duty paid of Rs. 210150/- will be disallowed. However as per Rule 6DD, where the payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender, then the stamp duty charges paid to Government can be allowed.

The Rs. 35000/- also can be allowed if it is paid to the Government and the Government department wanted the payment to be in legal tender (cash).

The above opinion is based on a very wide interpretation of the exceptions to sec 40A(3). The worst case is that all the expenses paid in cash will be disallowed.

sabyasachi mukherjee (27574 Points)
Replied 11 June 2022

Stamp Duty of Rs.2.1 lacs will be disallowed expenditure.

Haren (Accountant) (106 Points)
Replied 11 June 2022

Actually we have paid cash to Third Party Rs. 210150.00 for Stamp Duty & Registration Fee Purpose and Third Party through GRIPS vide his (third party SBI Bank) Payment this Duty to Goverment of West Bengal Dirrectorate of Registration & Stamp Revenue Departmnet in our Comnapny Name . It is allowable in Income Tax for daily Cash Restriction ?