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Sec 40 (A) (3)

Deepak Agarwal (Chartered Accountant) (117 Points)

15 July 2011

Hey friends..!!

i am little bit confused in sec 40 A 3 regarding cash payment exceeding 20000 in a day otherwise than by way of a/c payee cheque or draft..!!

Some says this sec not apply if there is seperate invoices from 1 supplier or party to whom we make payment..!!

However the wording in the sec is "Aggregate in a day", so i think that is not important that whether there are seperate invoices or not..., and the sec must apply if the payment exceeds 200000...!!

Please guide proper interpretation..!!

Thanks...!!!!

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7 Replies

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 15 July 2011

Mr. DEEPAK

plz read d section carefully,

it says in case of an expenditure incurred, in respect of which payment in escess of Rs. 20000 is made by way other than a/c payee bank dratf or cheque, den the exp. will not be allowed

so. in nutshell, it can be said that--- expenditure as well as payment must exceed Rs. 20000.

so, in case two diff invoices are made on same day, they will be considered as diff exp. only

plz correct me if m wrng

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Mukesh Kumar Singh (CA-FINAL) (4094 Points)
Replied 15 July 2011

ya, sumit you are absolutely right..................

Sunshine (Helping All) (10575 Points)
Replied 15 July 2011

separate invoices amount to 2 different expenditures...even if u pay more than the specified limit of 20000 in a day to the same person via 2 or more different vouchers, it will be allowed provided each voucher is below the limit of 20000......

Anvesh Desai (Chartered Accountant) (156 Points)
Replied 15 July 2011

Originally posted by : sumit grover
	Mr. DEEPAK plz read d section carefully, it says in case of an expenditure incurred, in respect of which payment in escess of20000 is made by way other than a/c payee bank dratf or cheque, den the exp. will not be allowed so. in nutshell, it can be said that--- expenditure as well as payment must exceed20000. so, in case two diff invoices are made on same day, they will be considered as diff exp. only plz correct me if m wrng

yup absolutely

CA Hemlata Sharma (Chartered Accountant) (29 Points)
Replied 15 July 2011

Ya, Sunshine u r right. bt sec also states that if expenditure incurred exceeds Rs20000 bt payments are made by splitting the whole amount in small denomination than Rs20000 then also the expenditure shall not b allowed.

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Mr. DEEPAK

plz read d section carefully,

it says in case of an expenditure incurred, in respect of which payment in escess of Rs. 20000 is made by way other than a/c payee bank dratf or cheque, den the exp. will not be allowed

so. in nutshell, it can be said that--- expenditure as well as payment must exceed Rs. 20000.

so, in case two diff invoices are made on same day, they will be considered as diff exp. only

plz correct me if m wrng)

Ya sumit u r right.

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CA MANIK KUMAR (Manager ) (710 Points)
Replied 15 July 2011

yess expenditure as well ass paymenttt shoulddd be more than 20000... if u r paying payment of two expenditure of 10000 and 15000 to the same person than this is allowed