query in respect of sec 40A(3)

CA Umashankar Vaishnav (Service in Cement Manufacturing Organization)   (1069 Points)

27 October 2009  

Dear members

 

I have a query in respect of sec 40A(3) under the profit and gain of business & profession.

 

Suppose that I have done a payment of Rs. 56000/- in cash and also in a single day in respect of purchase of raw material to any supplier of such goods . But such payment of Rs. 56000/- are made by means of following manners :

 

a) Payment in cash           Rs. 17000/- Billing Voucher No. CBS – 15 at 11:30 AM

b) Payment in cash           Rs. 15000/- Billing Voucher No. CBS – 16 at 12:45 PM

c) Payment in cash           Rs. 11000/- Billing Voucher No. CBS – 17 at 02:30 PM

d) Payment in cash           Rs. 13000/- Billing Voucher No. CBS – 18 at 04:45 PM

        Total                         Rs.  56000/-

 

 

Now , Such Transaction are liable to be disallowed under section 40A(3) of the Income Tax Act 1961 “ As Per The 41th Edition of V.K. Singhania of Direct Tax Book applicable for CA Final for May/Nov 2009 ( Assessment year 2009-10) ” .It is clearly mentioned that if the transaction separate billing are made for a transaction whose payment exceed Rs. 20000/- in a single day than No Disallowance arises as per sec 40A(3) .Hence, no disallowance comes to be arises .

 

Plz advise me from yours opinion in this reguard .

 

Thanks

From

Umashankar Vaishnav

CA Final (New Course)

May 2010 Gwalior