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Cash withdrawl in excess of Rs.20000 by partner

Ritesh (Financial Controller) (51 Points)

03 February 2010

Whether cash can be withdrawn by partner in excess of Rs. 20000/-

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4 Replies

Amir (Learner) (4016 Points)
Replied 03 February 2010

Dear Ritesh,

opening words of Sec 40A(3) says following "WHERE ASSESSEE INCURRS AN EXPENDITURE........."

Therefore if withdrawal of cash is for expenses then yes it will be dissallowed & if it is for personal drawings then no problems...........

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Max Payne (employed) (2574 Points)
Replied 03 February 2010

Yes u can, no problems as far as 40A or 269T is concerned...

It will not attract 40A(3), cos it is an not expenditure at all which is claimed as deduction under any provision of the act. The disallowance comes only if there is any "expenditure" incurred, which you claim as deduction in computing Income from business or profession...

269T also cannot be attracted since it is not the repayment of a loan or deposit as per the explanation to section 269T. So no tension about 271E also....

Max Payne (employed) (2574 Points)
Replied 03 February 2010

^^^ as long as its drawings the above answer holds good....

But same should not be for any expense, as pointed out by Amir, like the partner's salary or interest on capital for eg... or meeting any expenses of the firm….

Else 40A(3) will be attracted..

Ritesh (Financial Controller) (51 Points)
Replied 03 February 2010

Thank you everyone.

Had one more query....Whether a Partner can withdraw (in Cash) in excess of the share of profits in his current account (if there is cash available). If any restrictions are there please advise