Section 40a(3)

Why he disallowed???? whether all purchases were on cash????? 

my client has made entire payment by crossed cheques..(sorry friends, i forgot to write in my query)

Mitesh Ji

on going through your facts, it seems like that the said payment is a clear violation of Section 40A(3). As per law payment made by crossed cheque is alos not permissible. 

One thing i want to know whether in your bank statement name of party has been reflected or not ? 

legally your case is very weak, but on facts it can be explored. 

 

if required, you can get legal support from our Surat Office. 

Mitesh ji,

 

 

Section 40A(3) provides that any expenditure incurred as a payment in sum of exceeding Rs.20,000/- otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, shall not be allowed as a deduction. However if payment is being made for hiring or leasing, the limit is Rs.35,000/-.

 

Refering above, the Assessing Officers consent is correct as croosing of cheque does not satisfies the conditions of sec. 40A(3) and hence the said expenses are disallowed.

Dear Mr.Bikasbhai, plz give me ur contact No. where i may contact u...

Regards,

Mitesh Shah,

Advocate, Surat

9374881787

Dear, (ii) Cash payments in excess of Rs.20,000 - According to section 40A(3), where the assessee incurs any expenditure, in respect of which payment or aggregate of payments made to a person in a day otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft exceeds Rs.20,000, such expenditure shall not be allowed as a deduction.

Dear

 

 (ii) Cash payments in excess of Rs. 20,000 - According to section 40A(3), where the assessee incurs any expenditure, in respect of which payment or aggregate of payments made to a person in a day otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft exceeds Rs. 20,000, such expenditure shall not be allowed as a deduction.

Thanks,

Balendra Parmar

sir, chque should b a/c payee not crossed.there is different b/w a/c payee n crossed according to provision of sec 40A(3). ur case is actually weak.

Dear Friends,

I know my case is weak. But my client has made genuine purchases during fy 08-09. Even the party from whom purchases are made is availabe. It is quite apperant that he has actually made mistake by paying crossed cheques but there has to be some resort to this since if these much addition is made to my assessee, he would be ruined.

Regards,

Mitesh Shah

Advocate, Surat

9374881787