Sec 40A(3)

Not disallowed if both bills are below Rs.20,000.

Conditions for disallowance are:

-payment made in single day

-to a single person

-for a single expenditure

Hence, not disallowed.

Agreed with anubhav!!!!!!!!!!!

100% agree with Bhavik.

plz help me

AGREED WITH BHAVIK.

please any one help

As per Sec 40A(3) It is clearly stated that 'ANY EXPENDITURE' :- Firstly Here we should see that the law has written the word 'any' not many, Secondly the word is used ' expenditure' not expenditures.. which means the law is talking about a single expense/

in respect of which A PAYMENT OR AGGREGATE OF PAYMENTS:- Here it is quite important to notice that the payment or aggregate of payments,, which is nothing but related to that particular expense..

made to A PERSON in A DAY :- simply means an individual in a day.

should not exceed Rs 20,000/-.

In simple words it is clearly specified that the provisions of 40A(3) is applicable only when it is related to a single expenditure for which a payment or payments made to an individual. Therefore even if two seprate bills are raised by a supplier and payment made in cash which exceeds Rs 20,000/- the 40A(3) is not attracted... here we should take care that each payment should not exceed Rs 20,000/-.

No specified case law as yet but 'Circular no 34 dated 5/3/1970' was issued. But for some other clarifications.

For example:-

1) R purchases goods worth Rs 30000/- from G against one bill but makes the payment of Rs 18000/- and Rs 12000/- at different time on the same date.

ANS:- here sec 40A(3) is applicable

2) D purchases goods worth Rs 12000/- and Rs 15000/- against two bills from G and makes the payment of Rs 27000/- in cash at  one time.

ANS:- provisions of 40A(3) will not be attracted as in this case there are 2 expenditures represented by 2 seprate bills.

Deepak Bharwaj

Thank you bharadwaj

hii

am agree with Depak..am adding some illustration for more clarification ..

there are some addition given below:-

Rule 1:-

Bill should be not be more than 20000 or payment should not made to a same Expenditure(bill) at same day more than Rs.20000.

illustrat ion:-1             

A bill is raised for expenditure of Rs.100000.

cash payment are made as under:

1/8/2010                                          15000

2/8/2010                                          15000

3/8/2010                                          15000

Rs.40000-shall be disallowed under sec-40a(3).

illustrat ion:-2

Bill raised for expenditure of Rs.90000./payment made in one day 15000*6 at different point of of time time in a day.

Rs.90000/- will be disallowed.

illustrat ion:-3

bill no.1            Rs.15000

Bill no.2            Rs.15000

Bill no.3            Rs.18000

Cash Rs.48000. is paid on1.1.2010.section 40A(3) will not attracted.for 40A(3) the expenditureas well as the payemnt should exceed Rs.20000.

Regards

Sandip rai

But If Bill is of 20000 & We make part pymt then of Rs 10000/- on One Day  & 10000/- After 2 -3 days is it allowed

If bill is of Rs.20000 & payment Done in Cash Partly  9000/- &  After 2-3 Days 11000/- Will be allowed as a Deduction  u/s sec40A(3)

Yes , It will be allowed as payment made in asingle day is less than Rs 20000/

Dear Sandip,

Pls explain how under this transanction 4000/- is disallowed as this is a matter of Contradiction, so what exactly the basis is to disallow this amount. Kindly elaborate.

A bill is raised for expenditure of Rs.100000.

cash payment are made as under:

1/8/2010                                          15000

2/8/2010                                          15000

3/8/2010                                          15000

Rs.40000-shall be disallowed under sec-40a(3).

Thanks and Regards

Deepak

HII  Deepak and others

Yes, Deepak your finding is correct..1 bill on 5-8-2010-Rs.40000.was missed out by me while typing.

Sorry for inconvenience.

Regards and thanks

Sandip Rai

@ Bhavik - where is it mentioned that the expenditure should be of the same nature ( eg. stationery exp. as in ur example) to get disallowed? The section 40A(3) states that if the cash expenditure exceeds Rs.20000 in a day , it shall be disallowed, whether the expenditure is for one bill or as an  aggregate. Please clarify.