As per Sec 40A(3) It is clearly stated that 'ANY EXPENDITURE' :- Firstly Here we should see that the law has written the word 'any' not many, Secondly the word is used ' expenditure' not expenditures.. which means the law is talking about a single expense/
in respect of which A PAYMENT OR AGGREGATE OF PAYMENTS:- Here it is quite important to notice that the payment or aggregate of payments,, which is nothing but related to that particular expense..
made to A PERSON in A DAY :- simply means an individual in a day.
should not exceed Rs 20,000/-.
In simple words it is clearly specified that the provisions of 40A(3) is applicable only when it is related to a single expenditure for which a payment or payments made to an individual. Therefore even if two seprate bills are raised by a supplier and payment made in cash which exceeds Rs 20,000/- the 40A(3) is not attracted... here we should take care that each payment should not exceed Rs 20,000/-.
No specified case law as yet but 'Circular no 34 dated 5/3/1970' was issued. But for some other clarifications.
1) R purchases goods worth Rs 30000/- from G against one bill but makes the payment of Rs 18000/- and Rs 12000/- at different time on the same date.
ANS:- here sec 40A(3) is applicable
2) D purchases goods worth Rs 12000/- and Rs 15000/- against two bills from G and makes the payment of Rs 27000/- in cash at one time.
ANS:- provisions of 40A(3) will not be attracted as in this case there are 2 expenditures represented by 2 seprate bills.