Payment in excess of 20,000

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 August 2011 ABC, who is an individual & his professional receipts are less than 15 lacs for FY 2009-10 , relevant AY 2010-11. He has maintained books of account as required under the act, further he claimed expenses in P & L account which are paid in cash in excess of 20,000/- so can he avail those expenses which are debited in p & l account in excess of 20,000/-

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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01 August 2011 EXPENSES PAID IN CASH ATTRACT SECTION 40A(3) AND ARE LIKELY TO BE DISALLOWED.

*

TAX AUDIT LIMIT FOR AY 2010-11 IS RS. 10.00 LAC. ENSURE WHETHER TAX AUDIT REPORT HAS BEEN OBTAINED .

CA Aditya Goel

CA Aditya Goel (Expert)
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01 August 2011 No deduction on all the payments excess of Rs. 20,000 in cash subject to Rule 6DD.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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01 August 2011 yes. expenses in cash by more than Rs.20000 will be disallowed under sec.40A(3)

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Querist : Anonymous

Querist : Anonymous (Querist)

02 August 2011 This 40A(3) also applicable to Non Audit case ???? where he need not to get his books of account to be Audited,,,,,,,,,,, kindly clarify the same,,,,./...

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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02 August 2011 yes. applicable. no specific exception given to non audit case in sec.40A(3)

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Querist : Anonymous

Querist : Anonymous (Querist)

02 August 2011 THANK YOU,,,,,,,,,,,,

CA Aditya Goel

CA Aditya Goel (Expert)
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02 August 2011 As per me, Sec 40(A)3 does not apply in case of presumtive income case.= (i.e. where assesse is not required to maintain books of account)
As this section only applies in case of expenditure u/s 30 to 37 and in case of presumptive income cases sec 30 to 37 are not applicable.

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Querist : Anonymous

Querist : Anonymous (Querist)

04 August 2011 Have any specific exception for non audit case, whose professional receipt does not exceed 15 lacs or turnover 60 lacs.For AY 2011-12. can he claim expenses which are paid out in cash in excess of 20,000/-

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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04 August 2011
FOR AY 2011-12 :
I am trying to clarify the situation of cash expenses by extending the statement whatever Expert Aditya has written.

In case where Presumptive income is taken
Section 40A(3) can not be made applicable as the assessee is not required to maintain Books of Account if he shows 8% of turnover as profit.

Section 44AD(1) starts with the phrase-
" Notwithstanding anything to the contrary contained in section 28 to 43C....."

So by showing 8% profit , the assessee is allowed to contravene Section 40A(3) because he satisfies the basic condition of Section 44AD(1).

In case of profession payment exceeding 20000 in cash can be disallowed in the absence of such an immunity provision.

Querist : Anonymous

Querist : Anonymous (Querist)

05 August 2011 Thanks for resolving the query..

Querist : Anonymous

Querist : Anonymous (Querist)

05 August 2011 Thanks for resolving the query

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