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Payment exceed rs. 20000 in cash

Toshar Ahuja (Chartered Accountant) (107 Points)

21 February 2014

I have a query regarding payment exceeding Rs. 20000 in cash.

1. One of my client has a poultry farm and he has paid Rs. 20000 in cash in a single day against a bill for purchase of egg trays from a producer.

2. One of my client is a grower of apples and he has paid Rs. 20000 in cash in a single day against a bill for purchase of apple trays from a producer.

Are that both transactions covered under Rule 6DD or not ????

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21 Replies

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 21 February 2014

As per my knowledge they both should cover under Rule 6DD...

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(Guest)

No disallowance where the payment is made for the purchase of—

(i) agricultural or forest produce ; or

(ii) the produce of animal husbandry (including hides and skins) or dairy or poultry farming ; or

(iii) fish or fish products ; or

(iv) the products of horticulture or apiculture,

to the cultivator, grower or producer of such articles, produce or products;

2 Like

sumith raja (Student CA Final ) (41 Points)
Replied 21 February 2014

I donot think it should not be disallowed as this rule is applicale only for revenue expenses.Purchase f Trays are capital expenses. hence the said expenditure needs not be disallowed

2 Like

CA SUKSHAM ARORA (CA) (569 Points)
Replied 21 February 2014

I AGREE WITH THE ABOVE DISCUSSION.

vidit (Service class) (100 Points)
Replied 21 February 2014

It is covered under rule 6dd

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sumith raja (Student CA Final ) (41 Points)
Replied 21 February 2014

Originally posted by : Madhavi Pandit
	No disallowance where the payment is made for the purchase of— (i) agricultural or forest produce ; or (ii) the produce of animal husbandry (including hides and skins) or dairy or poultry farming ; or (iii) fish or fish products ; or (iv) the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products;

It is to be noted that payment hs been made for purchase of Trays and not for purchase of agricutural produce. This explaination cannot be justified as per my Knowledge

Keshav (Article assistant) (31 Points)
Replied 21 February 2014

Agreed with sumith raja,trays are neither agricultural produce nor poultry products

Proshanto Kundu (CA-Final STUDENT ) (235 Points)
Replied 21 February 2014

Both Are covered under Rule 6DD!

PRASANNA C ATHAVALE (Manager - Accounts) (24 Points)
Replied 21 February 2014

I agree with Ms Madhavi Pandit

1 Like

VIVEK MALAVE (Chartered Accountant) (378 Points)
Replied 21 February 2014

Heyyy I hav query that 1) adavance payment above rs 20000 for different expenses incurred by him for co paid to employee disallowable??? 2) book adj for expenses settlement amt above rs 20000 disalliwable?????

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VIVEK MALAVE (Chartered Accountant) (378 Points)
Replied 21 February 2014

(Guest)

I assumed that the purchase of egg trays and apple trays means purchase of eggs and apples along with the disposable cardboard/ paper trays (the ones we see in fruit shops.) If only fixed assets (Trays) are purchased which are reusable for a long time, then also the expenditure won't be disallowed as it is capital expenditure.