Cash payment more than 10,000

In which of the following cases (one or more), disallowance u/s 40A(3) is attracted ?

(1) payment of Rs.11,000 to Mr. A for stationery exps

(2) payment of Rs. 6,000 to Mr.A for stationery exps, Rs. 7,000 to Mr.A for Repairs and maintenance

(3) payment of Rs. 6,000 to Mr.A for stationery exps, Rs. 7,000 to Mr.B for Repairs and maintenance

(4) payment of Rs. 5,500 to Mr.A for stationery exps on 1/1/2018, 5,500 on 2/1/2018

(5) payment of Rs. 5,500 to Mr.A for stationery exps on 1/1/2018, 5,500 on 1/1/2018

 

Replies (18)

I think 1,2,5 will attract

but in case 2 there are two payments for two different transactions

so, I cannot exactly say.

however, 40A(3) not mentioned about transaction, it says that 'if a payment is made above 10,000 in a day for any expenditure in any mode other than the 3 specified modes, then that expenditure is disallowed'

since the word any expenditure is used

case 2 attracts disallowance, as there is a payment of Rs. 13,000 to single party smiley

Sec 40a(3)assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day.

Means single expenditure AND single person AND single day

In a single payment OR aggregate payment.

So, only case (1) will disallow.

why not (5)

in 5 he splitted the 11,000 to 2 5,500 invoices

Sorry, my mistake case (5) also will disallow.

40A(3) text : Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, 18[or use of electronic clearing system through a bank account, exceeds ten thousand rupees,] no deduction shall be allowed in respect of such expenditure.

in 1,2,5 a person, a day, a payment or aggregate, any expenditure all the conditions are satisfied

therefore 1,2,5 attracts disallowanceangel

as per provision 40A(3) the cases (1), (2), and (5) attract the disallowance of payment.
1,2 & 5 is disallow as per sec...

Point no 4 is not cleared it's in single bill or two separate bills...?!
case 4 is single transaction & single invoice, but payment made two times, to avoid disallowance
See, If there is a situation like;

(1 Bill + 1 Person + 1 day ) exceeding 10,000/- only then disallowance is attracted. Now make as many case as you want answer would Always be correct.

Btw in the given case, 1 & 5 is disallowance cases.
Wow @ Nitesh Bind Such an Awesome Crux..! You are amazing. 😊
You guys are always Most Welcome. ☺️

Section 40A(3):-

Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, 18[or use of electronic clearing system through a bank account, exceeds ten thousand rupees,] no deduction shall be allowed in respect of such expenditure.

Based on application of Provision case 1,2,5 will be disallowed.

Neither in given Section it is mentioned that Limit of 10000 is per Bill nor it is mentioned that limit is per Expenditure.

Limit is per Person in a day. 

Sorry to some person but we have to apply section of any law based on general practices in law rather than own Interpretation of law.(per bill /per Expense 😂🤣😁😜  )

Dear Prakash Joshi,

There is something which is found in every kind of LAW (i.e. Called Judgements and case; Hope you have heard about that).

No...?? Okay you will get to know in some years.
BTW You are toooooo Funny!!! Isn't it.. (😂🤣)

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
17 September 2026
Chartered Accountant

Dass Gupta & Associates

Gurgaon

CA

View Details
Company
06 October 2026
Assistant Manager - Audit and Compliance

Ravi K Jain & Co

Noida

Others

View Details
Company
Featured 03 October 2026
Accountant

A P Lodha and Associates

Jalna

B.Com

View Details
Company
ARTICLESHIP 01 October 2026
Articled Assistant

KPSN & Associates LLP

Chennai

CA Inter

View Details
Company
12 October 2026
AUDIT , ACCOUNTS AND TAXATION

KDSS

New Delhi

B.Com

View Details
Company
08 October 2026
SALES TELECALLER

HIRE NOVA

Lucknow

Graduate (Any)

View Details
Company
18 September 2026
Accounts & Finance Specialist

ULTRA CHEMICAL WORKS

Thane

CA Final

View Details
Company
19 September 2026
CA/Semi-CA/BCom

Pravin Sarvaiya

Mumbai

CA Inter

View Details