DISALLOWED ....the rule says....no single payment in a exceeding20000 "IN A SINGLE DAY"

it means if u pay 5000, 6000, and 10000 in a single day it will be disallowed u/s 40A(3)...

but if u pay 5000 today...6000 tomoro...and 10000 day aftr tomoro...then AO has to allow such payments...he cannot invoke 40A(3)...

for your information.....if payments are made for  plying, hiring or leasing goods cariages..the limit is 35000....other criteria remain the same.... this amendment is effective from 1-10-2009 with a prospective effect...

Originally posted by : rachit jain
	As per the recent amendement the definition is " where an assessee incure any expenditure for which, payment or aggregate of payment is made to a person in a day is in excess of Rs.20000 in cash the whole of such expenditure shall not be allowed as a deduction". so based on above definition the whole amount of Rs. 48000 will be disallowed.

dear rachit...............ur interpretation is wrong.

your definition is only saying that expenditure for which, payment or aggregate of payments made to a person in a day.

that means not only the aggregate payments but also the expenditure should be in excess of 20,000.

in the example given by me, all the three bills should be considered as three different expenditures and not one.

DISALLOWED>>>>>

i agreed with rachit jain .

If an assessee has incurred any Revenue Expenditure & the Payment or Aggregate of the payments made to a person with regard to Such Expenduture on any single day exceeds20000

1. A incurred an expenditure of45000, A makes separate payments of15000,18000,12000 all by cash to a person in single day.The aggregate amount of payment is Rs45000, which exceeds 20000.So it will not be allowed

2. A purchases goods worth18000,Rs 15000 against two bills from Mr Y & makes payment33000 in cash in a single day, in that case entire expenditure is allowed.

with regards to Trinath question ---Expenditure & Payment both are exceeding 20000 ie. 48000 so it will be disallowed

Not disallowed. As all expenditures are less than Rs.20000.

Hi All

This all depends on the way the person perceives the section to be.

If the assessee sees the section he will try to interprete it like since each of the invoice is less than 20000 none of the expense is disallowed.

If the taxman sees it he will argue since payment in a day exceeds 20000 to a person the same shall be disallowed.

Originally posted by : Jyoti Priya
	Hello sir, In my opinion the provisions of sec.40A(3) does not attaches to the problem as the individual payment in cash does not exceed 20000. And hences, the expenditure so made is allowed as deduction. Thanks.

I agree with Jyoti, individual payment of different bills in cash doesn't exceed. 20000. of three different bills in a day.

don't get confused.  just get the wordings i.e. cash payment made to a person on a day (in aggregate) of an amount exceeding Rs.20000 shall b disallowed.

ex: mr.x makes pmt. to mr. y on a day in aggregate exceeds Rs. 20000 therefoe it will b dissallowed u/s 40A(3)

@ Pankaj - Bahi plz read IT Act, with para 3 of Sec 40A(3).
 

agreed rachit  ..............

is there any case law on this situation ??

no matter how much time he purchase or the amount of bill...if payment is exceeding 20000 toa particular person in a day other than a/c payee cheque it will be disallowed...

abhi... i totally agree wid u................but what if  X  makes payment on 2 different bills amounting to Rs 18000/- & 19000/- to a same person on same day............is there any case law on this situation ??? ( i read in Income tax reconer of A.Y. 2011-12 that this pymt is allowable................................)

Acc. to case law [Kothari Sanitation & Tiles (P) Ltd.(Mad)]. if the assessee does more than one transaction in a day but the amt. in each transaction does not exceeds the limit prescribed in sec 40A(3),the rigors of sec. 40A(3) will not apply.