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Applicability of Section 40 A (3)

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15 February 2011 A partnership firm purchases raw materials from a proprietory firm having Mr X as common partner and proprietor in both the unit. The firm makes payment to proprietor firm in cash exceeding Rs 20000.00, on the assumption that the partner can withdraw the money in cash, and proprietor can add the money in cash. Does the money paid for purchases attract section 40 A (3) Please explain.
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CA. Lohith Jagadeesh

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CA. Lohith Jagadeesh (Expert)
15 February 2011 Hi,
Sec 40A(3) applies & disallowance would follow.

Regards
CA. Lohith. J
B.Com,ACA,CS,(ICWA),SAPM Hons,ITF Hons
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