To put thet in layman's words :

If, Any Cash payment made on a single day , to  any particular (same) party exceeds Rs. 20000, the corresponding Expense shall be disallowed u.s. 40 A(3).

if shown in books of accounts as payment made on the same day  then section will be attract  otherwise not . Since different bills.

If All Three of them were on same date then they will be disallowed... If paid on diffrent dates to the same person and above ₹20000 even then allowed

Dear All ,

We are a real estate company (ie acquiring Land & developing colonies) in maharashtra.

For purchasing land, cash  payment of  Rs 1Lacs to Rs 5 Lacs are made to single party in single day 

and the same is taken in the sale Deed.

My CA says that all the payments  will be disqualified in Income Tax and will be Taxable.

Kindly guide and mention the section so that i can speak to My CA.

Anu.

Dear Navinkumar,

if u make payment in CASH to ONE PERSON in a ONE DAY of More than Rs. 20,000/- then and then it can be disallowed.

HI navin kumar ,

The section 40A(3) is reproduced for your kind information.

" Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. "

If you have paid to the same person through 3 vouchers in a single day then sec 40A(3) would be attracted as the words "aggregate of payments" implies apparently from the act.

If you have paid to different persons through 3 vouchers in any day the sec 40A(3) would not be attracted as the word " a person " implies apparently

If non of the invoices / bill exceed Rs 30,000/- individually. The Sec 40A(3) is not attracted even if aggregate payment exceeds the threshold limit in a single day. Thus there wont be any disallowance.

Ref. Commentary ( Vinod K. Singhania)

Hi Friends

By this time your all doubts should have been cleared. Please note that in a single day in a particular transaction the amount should not exceed RS 20000.00. Hope this is clear to all. If it exceeds it will be disallowed.

(Jayam Ramesh K C)

Dear Caclubindia,

thanks a lot for contributing towards my query,

all the three vouchers are of the same person but made on different dates no such voucher exceeds Rs.20000/-

dear naveen...all the expenses will b allowed to deduct from profit....no one will disallowed

my query is resolved now thnks to allll :))))

purchase of capital assest secton 40A (3) is not applicable. exmple R puchse a building Rs 10 lakh and makes the payment in cash.

yes dear ganna iyer,

in case of purchase of FIXED ASSETS, this cash payment limit will not be applicable.