Sec 40A(3)
This query is : Resolved
28 January 2008
If A sells goods worth Rs. 1,00,000 to B and B sells the same to C at Rs. 1,30,000,
In the books of B, if it passes the ajdustment entry of,
C a/c Dr. 1,30,000
To A A/c 1,00,000
To Cash 30,000
My query:
1. will this adjustment entry be covered by S/40A(3). Does this mean deemed cash payment of more then Rs. 20,000.
Whether passing of such contra entry attracts provisions of section 40A(3) if not please if possible provide some case laws
In the books of B, if it passes the ajdustment entry of,
C a/c Dr. 1,30,000
To A A/c 1,00,000
To Cash 30,000
My query:
1. will this adjustment entry be covered by S/40A(3). Does this mean deemed cash payment of more then Rs. 20,000.
Whether passing of such contra entry attracts provisions of section 40A(3) if not please if possible provide some case laws
28 January 2008
no. it can not be deemed unless u actaully pay more then 20K.
Even u can pay 100000 by a/c payee cheque and balance by cash and make a single entry for the same.
Even u can pay 100000 by a/c payee cheque and balance by cash and make a single entry for the same.
28 January 2008
it is contra entry and you will jv in your book u/s 40a(3) i payments are in excessof rs 20000/-at one time is diallowed in your case cotra entry should be made and you are not pay in cash to A so sec 40A(3) is not applicable
28 January 2008
The following sub-section (3) shall be substituted for the existing sub-section (3) of section 40A by the Finance Act, 2007, w.e.f. 1-4-2008 :
(3)(a) Where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure
NOTE THAT THE WORDS USED ARE OTHERWISE THAN ACCOUNT PAYEE CHEQUE AND NOT THE WORDS CASH PAID...........ANY PAYMENT MADE BY CONTRA ENTRY IS PAYMENT OTHERWISE THAN ACCOUNT PAYEE CHEQUE
(3)(a) Where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure
NOTE THAT THE WORDS USED ARE OTHERWISE THAN ACCOUNT PAYEE CHEQUE AND NOT THE WORDS CASH PAID...........ANY PAYMENT MADE BY CONTRA ENTRY IS PAYMENT OTHERWISE THAN ACCOUNT PAYEE CHEQUE
29 January 2008
Dear Mr. Jain,
Read the above once more and be clear abt that.
First of all: EXPENDITURE INCURRED
then: PAYMENT is made
then: ABOVE 20000
then: not an a/c payee CHEQUE
here main thing is payment made for an expenditure by a mode of payment which is not by a a/c payee cheque mode.
Read the above once more and be clear abt that.
First of all: EXPENDITURE INCURRED
then: PAYMENT is made
then: ABOVE 20000
then: not an a/c payee CHEQUE
here main thing is payment made for an expenditure by a mode of payment which is not by a a/c payee cheque mode.
20 March 2008
as the payment is not >20000, 40A(3) does not come into picture
31 March 2012
As per Section 40A(3) expenditure incurred in excess of Rs. 20,000/-, payment for which is made otherwise than by an account payeee cheque are disallowed.
Rule 6DD of the Income Tax Rules provides circumstances in which payments exceeding Rs. 20,000/- are NOT disallowed.
Sub-ruled (d) provides that where the payment is made by way of adjustment, the amount will not be disallowed.
So, in the above case, the amount of Rs. 1 lakh shall NOT be disallowed.
However, you have made a cash payment of Rs. 30,000/-. This amount shall be disallowed.
Rule 6DD of the Income Tax Rules provides circumstances in which payments exceeding Rs. 20,000/- are NOT disallowed.
Sub-ruled (d) provides that where the payment is made by way of adjustment, the amount will not be disallowed.
So, in the above case, the amount of Rs. 1 lakh shall NOT be disallowed.
However, you have made a cash payment of Rs. 30,000/-. This amount shall be disallowed.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- TDS U/S. 194NF
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- Applicable TDS rate for sale of property in Nov 2024
- Import license renewal
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
- Strategical investment in Public listed company
Trending Online Classes
CAclubindia
