Cash payments

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Querist : Anonymous (Querist)

18 December 2014 is cash payment upto 20k applicable when we refund more than 20k to debtor in case of sale return

shivaji prasad bhimavarapu

shivaji prasad bhimavarapu (Expert)
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18 December 2014 Good question.We have to search for any case law.On the face of it, it seems it does not apply.But the treatment given to sales returns in VAT and Accounting may suggest that it attracts Sec 40A(3).Open for discussion.

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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18 December 2014 In my opinion it won't attract section 40A(3) since there is no expenditure incurred which may fall in this section. Refund of sales amount to debtor in case of sales return is not an expenditure incurred. Similarly it will also not attract 269T since it is neither repayment of loan nor of deposits.

Amol S Joglekar

Amol S Joglekar (Expert)
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18 December 2014 "considerations of business expediency and other relevant factors "

Was it expedient to pay in CASH?

The other relevant factor could be what was the mode of RECEIPT of money from the said debtors?

Sales return is definitely an EXPENDITURE.

Rupesh Jain

Rupesh Jain (Expert)
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18 December 2014 in my opinion if you have no transaction of sale or purchase in the party ledger then section 40A (3) applicable due to it consider as the loan when you received due to you have not done any transaction in first instance.

so it is safe to make payment below rs. 20000/- it better to make payment through banking system.