23 July 2013
provisions of section 40A(3) are not attracted in cash sales transactions as the provision is limited to allowability of "EXPENDITURE".
As far disallowance in the hands of buyer is concerned that depends upon the nature of expense in his hands and has no relevance to the seller.
For capital expeses in cash, as the same is not claimed as expediture, no disallowance u/s 40A(3) is called for. Please refer to circular no 34 dated 5-3-1970.
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