Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction.
I have a dout, when a company transfer some amount to employees imprest A/c and employees makes the payment in cash for expenses of the co. in excess of Rs. 20,000/.
Will it be allowed or disallowed??
| Originally posted by : SUBODH KUMAR | ||
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Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction. I have a dout, when a company transfer some amount to employees imprest A/c and employees makes the payment in cash for expenses of the co. in excess of Rs. 20,000/. Will it be allowed or disallowed?? |
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The expenditure is incurred on behalf of the company, so it will be covered under the provisions of 40A(3) of Income Tax Act, 1961. Since the payment exceeds Rs. 20,000, it will be disallowed.
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