A firm paid more than Rs 20000.00 ( say 38000.00 )cash to their one of the Creditors in a day. Now what will be the effect on the taxability of firm.
Max Payne
(employed)
(2569 Points)
Replied 11 April 2010
If the payment is against an expense
claimed as deduction in computing income from profits and gains of business,
then you will not get deduction for the expense to the extent it is paid in cash, as per section 40A(3).
Means their taxable income will increase.
But if they are making payment due to business expediency reasons or in circumstances covered in rule 6DD, disallowance of the expenditure will not arise.
Since the person is a creditor, i am assuming it is for purchase of goods or receipt of service. Disallowance as per sec 40A(3) will arise. If it is payment against capital good price, the disallowance wont come. (as per circular 34, dated 05-03-1970)
SUDHIR & PRADEEP JI
(CA FINAL+LLB + DISA)
(2299 Points)
Replied 11 April 2010
the whole amount will be disallowed i.e rs 38000/- will be treated as the income of the firm or we can say that firm cannot cliam the deduction for the amount of purchases taken from the creditors revelant to tht amount
Aravind..
(CA)
(1262 Points)
Replied 12 April 2010
the only case when provisions of 40A(3) can be applied is when both the amount of the bill and the payment is more than rs.20000. so, if two bills for 19000 each will not attract 40A(3).
experts please reply whether this view is correct or not.
sunny lalwani
(CA Final student)
(49 Points)
Replied 12 April 2010
the whole amt of Rs.38000/- will be disallowed as per sec 40A(3) of the I.T. Act and become taxable
CA Mohit kumar jain
(Searching Source of Money)
(149 Points)
Replied 12 April 2010
the amount allow if the any bill amount not exceeds rs.20000
& as per rules of 6dd in both situation the payment will be allowed
Amit Jain
(Proprietor)
(290 Points)
Replied 12 April 2010
If the payment is against a bill which is more than 20 k, then it will be disallowed. For example one bill is for Rs 25,000 and the other is for Rs 13,000 then I guess only amount to the tune of Rs 25,000 shall be disallowed.
Rajendra Nath Datta
(0)
(101 Points)
Replied 12 April 2010
If wages pay to a employee in case of Rs 40000 then will be allow by the Income tax to show as a deduction in the hand of employer?
ganesh bhandari
(B.Com Final C.A. Final CS Article Clerk )
(239 Points)
Replied 12 April 2010
Hay if you can prove that the payment were in Exceptions to Rule 6DD then the coomplete amount will be allowed.
Or else the whole amount will be disallowed..
Divya Karthik
(S)
(459 Points)
Replied 12 April 2010
Actually, payment made to one person in a day should not exceed Rs.20,000/- in cash rite?If payment made in cash to a single person, ie hes havvin 2 bills. 1) amounting to rs.7000 & 2 ) amounting to Rs.14000. In total it exceeds 20000 in dat day...Will it be disallowed?
Pls reply
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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