40A(2) will precedes over 40A(2) and only after it that 40A(3) 'll be levied in ur query 30000-11000=19000 will be alloed as deduction and 11000 will be fully disallowed

sec40A(2)n will be applied first..

 compare rs. 19000 wd Rs.30000/-. which concludes that 11000/- will be disallowed on a/c of amount in excess of fair market value..

 & tehreafter sec 40A(3) will be seen... as per this section nothing shall be disallowed as the amount i.e. Rs. 19000/- i. e. (Rs,20000-Rs 11000) does in no sense exceeds Rs.20000/- which the minimum requisite value per bill in a single day payment for the applicability of sec 40A(3).

40A(2) IS APPLIED ONLY BY AN ASSESSING OFFICER .SO,ACCORDING 2 40A(3) TOTAL 30000 IS DISALLOWED

Dear Sir,

Section 40 A(3) will be applicable to those expenses which are debited to Profit and Loss Account. debiting profit and Loss account in the sense expenses allowed under the income tax act. when expenditure disallowed u/s 40 A (2) Rs.11,000/- the expenditure allowed in computation will be Rs.19,000/- so Section 40 A (3) will not be applicable in this case.

in my opinion Section 40 A(2) has to be applied first and section 40 A(3) next

Sec 40A(2) shall apply first, go throught the Singhania's book  Problem 165-P4 at Page No. 431

I presum that there is no priority given to sections...

To be very specific Section 40(A)(2) is generally applied by AO and so here full amount of Rs. 30000 vl b disallowd under section 40(A)(3)...

In my opinion there is no specific provision under the Income Tax for application of sections. Generally the department will apply the section which is benefical to it. 

Hey whats the order of this sections stuff...so can i ask a doubt...what abt a petrol exp of a car used for 50% personal and 50% biz purpose which runs to say 30,000 rs in one bill paid in cash(i know its a absurd amt).. So will half of it be disallowed u/s 37 first and rest 15000 will be allowed??as its under 40 (A)(3) limits?

Yaa this querry is also in the nature of my querry,

if expeses is disallowed becase of personal nature,

then on the balace amount other provision will be applicable, hence section 40(3) will not applicable in this case also.

 yea sir that was what even i was asking..i don think the sections are applicable in there order...lik 40 A 2 comes first and then 40 A 3...because if so one section would defeat the purpose of other section if that it is the case

 First 40(A)(2) will be applied and the amount disallowed u/s 40(A)(2) will be reduced from the whole amount and the resulting amount will apply to 40 (A)(3)

sir,

excessive payment of (30000-19000)=11000 will b disallowed under sec 40(A)2 first.

then remaining 19000 will be fully allowed as its under rs 20000 and 40(A)3 will not apply.

THIS is D correct answer.

from my point of view whole 30000 disallowed....

first of all 40 A(2) will apply then whatever amount left after the applicability of 40A(2) then after  40A(3) will apply in the current case as the fair market value is 19000/- so 11000/- will be disallow under section 40A(2) and balance left is Rs 19000/- which is less then 20000/- so proviso of section 40A(3) will not apply

40 A(2) is optional for AO. but 40 A(3) is mandatory for AO.  if 40 A(2) is applied by the AO then remaining expenses can not be disallowd as it will be less than 20000. but if AO apply 40 A(3) then whole 30000 will be disallowed. AO can select any option.