Sec. 40A(3) of Income tax Act

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Md Ghouse (Querist)
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13 September 2007 Hi Guys,

This is Mohammed Ghouse, I am in CA Finals. I need a clarification on the following:

Whether Restriction stated in S. 40A(3)of IT Act is applicable on bill/invoice wise or payment wise. Supposing an expenditure of Rs. 1 lacs (covered by single bill) is paid off as Rs. 20000 each on different occasion supported by diffrent cash voucher, whether still the above said section is attracted.

Good Luck & warm reg.

Ghouse

CMA Gul S

CMA Gul S (Expert)
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13 September 2007 Hi Mr Ghouse,

Yes the Section 40A(3) would be attracted, you are not allowed to make the Cash payment to same party in the same accounting year above 20000.

please refer the following judgements for further clarifications

Related Judgements

COMMISSIONER OF INCOME-TAX v. SUNDARAM INDUSTRIES LTD.