Question 1:-if assessee incurs a expenditure & the payments for such expenditure is made by cash and he paid for such expenditure in 5 installments in respect of 5 invoices raised on same day to a same party but invoices raised are for different purposes and each invoice is less than 20,000 but the aggregate of these invoices exceeds Rs. 20,000. Are all the invoices be disallowed U/s 40A(3)?
8 Replies
Vikas Prajapati
(CA)
(249 Points)
Replied 24 November 2012
Section 40A(3) of the income tax act says that if the assessee makes any payment or receipt, expect from cross payee cheque or dd or any banking mode, exceeding Rs. 20000 to a single party is disallowed and treated as the personal expenditure or receipt of the assessee.
It is dissallowed.
CA Ruben Balooni
(Professionalism ™)
(1324 Points)
Replied 24 November 2012
As per Section 40A(3) "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."
Here each invoice shall mean a separate expenditure. Since in your case each invoice is less than 20,000, hence the expenditure shall be allowed.
- Ruben Balooni
Raj Kr
(CA Final student )
(200 Points)
Replied 24 November 2012
well said "Ruben Balooni"(
ur alsolutely ryt :)
Mr. Anuj Jain - In short---Expenditure as well as payment should be exceed 20000rs to be disallowed.
CA Ruben Balooni
(Professionalism ™)
(1324 Points)
Replied 24 November 2012
| Originally posted by : Raj Kr | ||
 |
well said "Ruben Balooni"( ur alsolutely ryt :) |
 |
Thanks :)
Saket Sinha
(Student)
(129 Points)
Replied 25 November 2012
As per the provisions of sec40A(3), an expenditure shall be disallowed only when both the expenditure and payment amount exceed Rs20000.
CA Harshil Shah
(Taxation - Manager)
(27 Points)
Replied 27 November 2012
The said expenditure should be disallowed as Sec.40(A)(3) contemplates disallowance for payment other than an account payee cheque to a particular person in one single day in excess of Rs.20000
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