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40(a) 3 on purchase bill

Jyothis (Article) (1127 Points)

05 March 2016

A company purchased Flooring tiles costing Rs.31,944 (inclusive of vat),payment was made in cash.

Will Disallowance u/s 40(A)3 attracts on this purchase.

Cases

(1) Cash payment is accounted by company in a single day & Accounted as Expense

(2) Cash payment is acconted by company in 2 different days.

(3) Payment is made in single day & Accounted as Fixed Assets(Addition to Buildings)

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5 Replies

(Guest)

1) Yes, disallowed

2) No

3)No

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CA Prateek Garg (CA in Practice) (1447 Points)
Replied 05 March 2016

Disallowed in first case.

Disallowed in second case also if there is only 1 bill

No disallowance in third case

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Jyothis (Article) (1127 Points)
Replied 05 March 2016

Similar case, Flooring works service bill

Total service charge - Rs.67,700 - (Single invoice)

All payments were made in cash in various instalments (Not exceeding Rs.20,000) & no tds was deducted.

Service provider has now agreed to provide 4 invoice,so that none of amount & invoice will be higher than Rs.20,000.-So 40(A)3 issue is solved.

Now regarding tds & service tax (Reverse charge)-

Cases

(1) - None of the payment or expense booked during the period during exceeds Rs.30,000 but only one invoice was issue at the end amounting to Rs.67,700.-Was it necessary to deduct tds on account that final bill amount has exceeded Rs.30,000.

(2) - Is it necessary for the company to pay service tax on reverse charge basis.Since-Materials are purchased from other party & Services are done by local labourers.

DEEPAK CHAUHAN (Student CA Final ) (28 Points)
Replied 05 March 2016

In First case for TDS Compliance.

All payments were made in cash in various instalments (Not exceeding Rs.20,000) & no tds was deducted --------- TDS to be deducted irrespective of cash payment......when single bill exceeds Rs.30,000

Service provider has now agreed to provide 4 invoice,so that none of amount & invoice will be higher than Rs.20,000.-So 40(A)3 issue is solved---------- No need to deduct TDS when single bill does not exceed Rs.30,000 and for our case Aggregate Rs.75,000 is also not exceeding.

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