21 January 2010
As per Section 40A(3, if following conditions are satisfied then 100% expenditure gets disallowed.  The assessee incurs any expenditure which is other wise deductible under other provisions of the Act for computing Business/ Profession.  A payment in respect of such expenditure, or part thereof exceeds Rs. 20,000/- in a day to a person  The payment mentioned in condition two is made in CASH or BEARER CHEQUE.
However, the above provision has certain specific exceptions defined in Rule 6DD.
Reasons:- In order to avoid assesses from charging fictitious expenses.
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