For disallowance of Cash payment of more than 20000, where is it necessary to exceed both payment and bill by more than 20000???
In the reference book of Dr.VK Singhania scope of section given like that
If an assessee make payment of 2 different bills(none of them exceeds Rs.20000) at the same time in cash or bearer or crossed cheque, Section 40A(3) not applicable even if, the aggregate payment is more than 20000. This is because of the fact that section 40A(3) is applicable only if in respect of an expenditure which is in excess of Rs20000. In other words, for applicability of Section 40A(3) both the payment and amount of bill(or expenditure) should exceed Rs.20000.
03 April 2013
That related to cash purchases i.e purchases/incurring expenditure and payment of cash both taken place at the same time then if the non of the bill amount doesn't exceeded Rs.20,000 then section 40A(3) doesn't attracts.
For example: On 3-4-2013 you purchased through bill no 1: Rs 15,000 and bill no 2: Rs 18,000 and you paid cash at the same time i.e at the time of purchase then section 40A(3) doesn't attracts eventhough aggreegate of bills and payment exceeds Rs.20,000 i.e for cash purchases/cash expenditure section 40A(3) doesn't attracts.
In case in the aboe case you make the purchases on 3-4-2013 by credit i.e credit purchasees on 3-4-2013 through bill no:1 & 2 with Rs.15,000 and 18,000 respectively and on the later date i.e after 3-4-2013 you paid cash of Rs.33,000 for the puchases made on 3-4-2013 through r.no:1 in this case section 40A(3) attracts.
So section 40A(3) not applicable for cash purchases it applicable for cash payments.
Cash purchases means paying of cash immedieately at the time of making purchases/incurring expenses i.e making by cash bill/cash invoice.
Cash payment means paying of cash for the debt incurred previously.
So section 40A(3) attracts for cash payment but not attracts for cash purchases if non of the bill doesn't exceeded Rs.20,000 on a single day eventhough aggreegate of bill on the same day from same customer exceeds Rs.20,000.
So at the time of cash purchases required both bill and payment by cash in excess of Rs.20,000 in other cases required payment of cash in excess of Rs.20,000 in a single day to attract section 40A(3).
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