Cash payment >20000 by deposit in customer bank account

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Anoop (Querist)
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08 December 2011 Whether, MULTIPLE cash deposit PER DAY in customer/supplier's BANK ACCOUNT for expenditure exceeds 20000, 40A(3) apply..??

bcoz the section says "otherwise than by account payee cheque / bank draft"...

reply a.s.a.p

thanks and regards

CA VISHAL RANA,CS,B.Com,AMFI

CA VISHAL RANA,CS,B.Com,AMFI (Expert)
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08 December 2011 Directly Deposit in supplier's account has same effect as it is paid through account payee cheque because payment by a/c payee cheque will also credit in supplier's a/c as deposit directly credit in a/c.

so as per my view sec 40A(3) will not applicable here.

wait for opinion of other experts

Nirpendra Singh

Nirpendra Singh (Expert)
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08 December 2011 yes dear section 40a (3) would not be applicable here

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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08 December 2011 Section 40(A)(3) will be applicable. Not allowed under rule 6DD.

6DD. No disallowance under sub-section (3) of section 40A shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3A) of section 40A where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees in the cases and circumstances specified hereunder, namely :—

(a) where the payment is made to—

(i) the Reserve Bank of India or any banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(ii) the State Bank of India or any subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959);

(iii) any co-operative bank or land mortgage bank;

(iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949 (10 of 1949);

(v) the Life Insurance Corporation of India established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956):

(b) where the payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender;

(c) where the payment is made by—

(i) any letter of credit arrangements through a bank,

(ii) a mail or telegraphic transfer through a bank;

(iii) a book adjustment from any account in a bank to any other account in that or any other bank;

(iv) a bill of exchange made payable only to a bank;

(v) the use of electronic clearing system through a bank account;

(vi) a credit card;

(vii) a debit card.