diallowance u/s. 40A (3)

This query is : Resolved

JANKI (Querist)
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16 July 2009 In one of the company, many payments are made exceeding rs. 20000 against the same bill. Is there any way by which such entries can be changed so that the disallowance u/s. 40A (3) is not attracted.

Plz answer this as soon as possible.

vinod kumar lalwani

vinod kumar lalwani (Expert)
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16 July 2009 hello!

It is required by the act that

payment in a day

to a single person

for same bill

should not be made for more than 20000 in cash.

so to comply with all requirements u have to change the date of entry in your records.

Abhishek Mohta

Abhishek Mohta (Expert)
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16 July 2009 You have to split the entries into two or three and pass them on different dates. Or the expenses can be allowed if you can prove that there is no banking facilities available near to the premises wherefrom the payments were made.

The problem arises that if you change the entries and split into different dates your cash balance for the day would be affected.

As per the provisions of the sec the payment should not be one time payment or the cumulative payment for the day. If the payment is made on different dates and against the same bill then it is allowed.

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