A Trader purchases goods in Cash throughout the year from a Single seller(Firm) , most of the times exceeding the Rs 20000/- limit, to avail an additional 3% discount. The trader is a partner in the selling firm as well.
Will this entire amount be disallowed? Can we apply sec 40A(3)(iv) in this case to avoid the disallowance?
1. As your trader is the one of the partner in that firm let he split the cash entry below Rs. 20000/- and care full no negative cash arises to you as well as selling firm .
2. Make sure that selling firm also take same entry as incorporated in trader books.
You may escape from dis allowances.
There are several case laws which says that if genuineness of the transaction proved then no dis allowances arises .
CAclubindia
