Section 40a(3)

Amit Kumar Verma (CA Final CS Professional)   (501 Points)

31 October 2012  

 

Hi friends!
Though section 40A(3) is a general section, I have certail queries regarding its applicability. Please give your suggestions in the following cases:
 
Case - 1
In Assessment Year 2010-11, an assessee has made cash payment of Rs. 1,00,000/- in a day to a person against the payment of different bills below Rs. 20,000/- raised on different dates in the same assessment year. In this case, whether disallowance under section 40A(3) of the Income Tax Act will be attracted.
 
Case - 2
If an assessee purchases Material A (Expense) and Material B (Expense) on 01.04.2009 worth Rs. 15,000/- and 12,000/- respectively from Mr. X and makes cash payment of Rs. 27,000/- on 03.04.2009 against payment of both the bills, whether disallowance under section 40A(3) will be attracted.
 
Please give reference to relevant case law and/or section/interpretation in support of your answer.

Thanks 

Amit Kumar Verma