A Ltd a company purchases goods from B Ltd for Rs.2,00,000/- A Ltd pays Rs.1,00,000 in an account payee cheque and rest in cash on 5 different days. Does it lead to disallowance.
Please reply
5 Replies
RAJU
(LEARNER)
(1089 Points)
Replied 22 July 2009
No, since the payment has not exceeded Rs.20,000/- on a single day.
Sangam
(CA)
(1329 Points)
Replied 22 July 2009
d cash payment should b more den 20000 for disallowance in a single day
since in dis case it is 20000 and on diff. dates
so it is fully allowed..
PRAMOD PANDIT M.COM , CA FINAL
(PROFESSIONAL SERVICES)
(207 Points)
Replied 25 July 2009
actual when payment made for labour or transport it is not valid to pay more than 20000 in cash for payment against purchased it is allowed.
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 25 July 2009
payment made in cash in excess of Rs. 20000 made in different day is allowed under the income tax act.
N.K.Bharath Kumar
(Chartered Accountant)
(60 Points)
Replied 27 July 2009
The main intention of Sec 40A(3) is to restrict the cash payments in excess of Rs.20000 in aggregate (to curb the black money in general) . If the invoice is for the entire 2 lakhs, the cash payments made on different dates will be disallowed. However, if invoices are of different amounts with different dates, then the same can be allowed. Otherwise, the main objective of that section itself will get defeated.
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