Section 40a(3)- dissallowability of cash expenditure
This query is : Resolved
13 April 2013
if 3 seprate bills drawn by trader (15k+15k+18K) in a same day however payment made by the company after 1 month in CASH I.e 48K.now following are queries.
1.whethe 40A(3) shall applicable in the hands of co.?
2.if trader has drawn all 3 bills on different date bt payment made on same date in cash in such case 40A(3) will apply?
1.whethe 40A(3) shall applicable in the hands of co.?
2.if trader has drawn all 3 bills on different date bt payment made on same date in cash in such case 40A(3) will apply?
13 April 2013
For the both the above cases apply section 40A(3).
For applicability of section 40A(3) date of payment of cash and amount of cash is important date of bills irrelavent.
In case for the above case if the payment has been paid in three different dates and each day doesn't exceed Rs. 20,000 then section 40A(3) not applicable eventhough 3 bills are same date.
So in your both cases on a single day the payment of cash to the creditor exceeds Rs.20,000 so section 40A(3) applicable.
OM SAI SRI SAI JAI JAI SAI
For applicability of section 40A(3) date of payment of cash and amount of cash is important date of bills irrelavent.
In case for the above case if the payment has been paid in three different dates and each day doesn't exceed Rs. 20,000 then section 40A(3) not applicable eventhough 3 bills are same date.
So in your both cases on a single day the payment of cash to the creditor exceeds Rs.20,000 so section 40A(3) applicable.
OM SAI SRI SAI JAI JAI SAI
13 April 2013
Yes in 1st case will apply.. bt in 2nd bill are not drawn on same date hence exp incurred by assessee co. Is less than 20k on particular day.so might b not applicable.Wht u say?
13 April 2013
Rply plzzzz...any1??
14 April 2013
To applicability of section 40A(3) amount of cash paying on a single day is important for which bills you are paying and the bill amount is not important and doesn't consider.
For example: If on the first day you have a bill of Rs.16,000 and on second day(or another day) you have a bill of Rs. 10,000 but for the both bills you paying cash on the third day(or another day) of Rs. 26,000 so on the third day you are paying cash more than excess of Rs.20,000 so section 40A(3) applicable.
Assume for the same above case on the third day you paid Rs.5,000(it may be adjust with any of the both the bills) and on the fourth day you paid balance of Rs.21,000 through cash then section 40A(3) applicable on the fourth day.
In one word eventhough bills are different dates and the bill amount is even lower than 20000 or more but the amount of cash payment on a single day is more than Rs.20,000 then section 40A(3) applicable.
When your on a single day you paying cash of Rs.20000 more then section 40A(3) applicable. So date of bills and amount of bills is irrelavent for applicability of section 40A(3) only cash payment on a single day and the payment incurred for the purpose of expenditure incurred either previously or now is important but date of bills and amount of bills irrelavent.
So no doubt for your both cases section 40A(3) must and should be apply.
Still you have doubt or confusion then please provide me your emaill id i will mail you with examples.
OM SAI SRI SAI JAI JAI SAI
For example: If on the first day you have a bill of Rs.16,000 and on second day(or another day) you have a bill of Rs. 10,000 but for the both bills you paying cash on the third day(or another day) of Rs. 26,000 so on the third day you are paying cash more than excess of Rs.20,000 so section 40A(3) applicable.
Assume for the same above case on the third day you paid Rs.5,000(it may be adjust with any of the both the bills) and on the fourth day you paid balance of Rs.21,000 through cash then section 40A(3) applicable on the fourth day.
In one word eventhough bills are different dates and the bill amount is even lower than 20000 or more but the amount of cash payment on a single day is more than Rs.20,000 then section 40A(3) applicable.
When your on a single day you paying cash of Rs.20000 more then section 40A(3) applicable. So date of bills and amount of bills is irrelavent for applicability of section 40A(3) only cash payment on a single day and the payment incurred for the purpose of expenditure incurred either previously or now is important but date of bills and amount of bills irrelavent.
So no doubt for your both cases section 40A(3) must and should be apply.
Still you have doubt or confusion then please provide me your emaill id i will mail you with examples.
OM SAI SRI SAI JAI JAI SAI
14 April 2013
Bt in vinod gupta book of ca final there is one ex. where given ...3 bills seprate but bill date not given After that payment of 48K is made in cash so in that case 40A(3) is not apply answer stated in book.
Eamil id.darji_aditya@yahoo.co.in
Eamil id.darji_aditya@yahoo.co.in
14 April 2013
Payment is made in respect of incurring any expenditure. This line is important.
.
If the payment exceeds Rs 20000/- in respect of any expenditure, it is covered by Section 40A(3). When Expenditure itself is less than Rs 20000/-, Section 40A(3) does not restricts its payment in Cash.
.
3 bills can not be said as a single expenditure. These are considered separate expenditures. If each bill is less than 20000, Payment in cash can be made in a single day even if the total amount being paid is more than 20000/- as the total amount is not being paid in respect of a single expenditure. It is being paid for different expenditures.
.
In both the cases 40A(3) is not attracted.
.
.
If the payment exceeds Rs 20000/- in respect of any expenditure, it is covered by Section 40A(3). When Expenditure itself is less than Rs 20000/-, Section 40A(3) does not restricts its payment in Cash.
.
3 bills can not be said as a single expenditure. These are considered separate expenditures. If each bill is less than 20000, Payment in cash can be made in a single day even if the total amount being paid is more than 20000/- as the total amount is not being paid in respect of a single expenditure. It is being paid for different expenditures.
.
In both the cases 40A(3) is not attracted.
.
15 April 2013
Got it..sir!!thank you! In book explanation not was nt giiven
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