Cash payment exceed 20000

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 June 2012 Cash Payment exceed 20000 in a day to the one single Party but there is two separate transaction Bills is it disallowed Expenditure under section 40A(3)

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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08 June 2012 Yes the expenditure is disallowed becuase Section 40A(3) also applies to AGGREGATE of payments made in a day.

C.A Anshul Singhal

C.A Anshul Singhal (Expert)
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08 June 2012 Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction.
There are two Transaction Bill Rs 20000 Amount Limit For Particular Expenditure not a Aggregate Payment a Day.
First Bill amount ---------30000
Second Bill amount---------25000
Now You Are Received Rs 21000 Against First Bill & Rs 15000 Against Second Bill.
Payment above Rs 20000 Now Not Disallowed U/s 40A(3)

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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08 June 2012 Dear Anshul, Section 40A(3) provides as under:

Where the assessee incurs any expenditure in respect of which 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, no deduction shall be allowed in respect of such expenditure.

As you can see the word "AGGREGATE" has been used in the Section.

Accordingly, if payments of different invoices (each less than 20,000) is made in the SAME day, then Section 40A(3) is attracted and the total expenditure shall be disallowed.

Querist : Anonymous

Querist : Anonymous (Querist)

20 February 2013 thanks to all