section 40 B, Income Tax

[mayank gupta]

sir if a entity has purchased goods worth Rs 35000 on credit and passed the entry

Purchase a/c Dr 35000 

     to Creditor A/C

and then the payment is made personally to the creditor by the proprietor

and then he passes the entry 

Creditor A/c.... Dr

    To Capital A/C

so this expense is allowed in section 40 B of Income Tax Act or not because the payment is settled in cash only , no payment is made by account payee cheque 

by

Mayank Gupta

Posts / Replies

[CA GOPALJI AGRAWAL]

First it is presumed that you are concerned about sec 40A(3). Your case is apparently covered under the mischief of law. However you may refer the exception under rule 6DD.