Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

Disallowance u/s 40 (a) 3

09 August 2013

The assesee had purchased some kits from a shop for more than Rs 20000 and paid the amount in cash because the shopkeeper was neither accepting cheque nor any card. Will such expense still be disallowed u/s 40 (A) 3 ?? Reply asap.

Reply
Follow
Share

4 Replies

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3469 Points)
Replied 10 August 2013

Yes, Sridhar.

Thanks

Upgrade to CAclubindia Pro. Subscribe Now!

Shridhar Sharma (Article) (40 Points)
Replied 10 August 2013

but the assessee had no option except for paying in cash...

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 10 August 2013

As per sec 40A(3),it will be disallowed.and furthur if such person can prove that payment is made in a city where there is no bank facility at the time of payment or when u r making payment no banks are working due'to holiday or strike .furthur the solution to your query is,the client should ask seller to break up each bill not exceeding rs 20,000.generally as per sec 40A(3),both bill amount and payment amount in a single day and to same party should not exceed rs 20,000 and another condition,it should not be intentential in such a way to deceive.but in case ur case as seller donot accept cheque,i think u can ask seller to give more than one bill in such a way no bill amount should not exceed rs 20,000

1 Like