25 August 2020
Q1. A manufacturing company paid above rs 10000 in a single day to a creditors against a single invoice for hardware purchased (stores & spares) . is is disallowed u/s 40A(3) or not.
Q2. Payment made for Rs 12000 in cash in a single day for purchase of petrol to a single person is it disallowed.
Q3. Payment made Rs 15000 in cash for purchase of a mobile , is it disallowed.
Q4 . what expenses should be consider for sec 40A(3
26 August 2020
Yes, all the expenses mentioned in Q1, Q2 are disallowed.
However, you need not disallow purchase of mobile if it was treated as fixed asset.
26 August 2020
Section 40A(3) and 40A(3A) - Any payment made otherwise than by Account Payee Cheque/ bank Draft or through electronic transfer except as provided under Rule 6DD in excess of Rs.10000 in a day (All payments to be aggregated) to a person against any expenditure or to a creditor is disallowed in full and accordingly the issues in Q1 and Q2, the sum paid shall be liable to be disallowed. As far as Q3 is concerned there will be no disallowance u/s 40A(3) but no depreciation shall be allowed on such asset as payment there for has been made in cash.
Reply to Q4 - Any expenditure, purchase etc. which is charged to profit and loss account shall be covered.
The rigours of s. 40A(3) / 40A93A) are now applicable to charitable. Institutions as well.
26 August 2020
Thank You. I have a another question Q. Paid to a contractor in cash rs 10000 in a day for labour charges for a single invoice of rs 65000/- whole payments are made in cash as rs 10000 in a day in different days . is it allowed expense
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