Sec.40a(3)

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Soumit Roy (Querist)
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04 February 2013 Payment to a creditor in cash above Rs.20,000/- in a day. What effect will be there? will the provision under Sec.40A(3)applicable in this case? If yes then plz tell me what effect will be there in Tax Computation?

Note:- Creditor means from whom I purchase goods for the purpose of sale. It is not for any expenditure.

ACS Gaurav Jain

ACS Gaurav Jain (Expert)
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04 February 2013 All outgoings, including purchase of stock-in-trade are covered - Section 40A(3) refers to the expenditure incurred by the assessee in respect of which payment is made. It means all outgoings are brought under the word ‘expenditure’ for the purpose of the sub-section. The expenditure for purchasing the stock-in-trade is one of such outgoings. - Attar Singh Gurmukh Singh v. ITO [1991] 191 ITR 667 (SC).