Cash purchases

Mr. A.K. Agrawal, your situation seems to be very complicated as you are bound to pay such expenditure in cash.

Please consider the below given Decision

ITO should adopt practical and not a technical approach - The ITO should take a practical approach to problems and strike a balance between the direction of law and hardship to the assessee. He should not enmesh himself in technicalities. After all, the object is not to deprive the assessee of the deduction which he is otherwise entitled to claim - Girdharilal Goenka v. CIT (supra).

The contention of the department behind section 40A(3) is to avoid usage of black money and not to hinder the growth of business.

In your case your problem is very genuine and thats why i think that expenditures shall be allowed.

In my opinion I have two way outs :-

1. Stop purchasing from them (practically not possible).

2. Take a written representation from them that they will accept payment only in cash along with the reasons for the same.( you know how to do it)

Hi

Hope you can do cash purchase with URD(unregister dealer) on issuing cheque in the name of supplier with out account pay.

Hi all,

i want to ask whether its applicable to Medical field also.

When major operations or emergency operations are done, hospital take cash in advance as a deposit.

Goverment allows and how its been under goverment acts.

Regards,

Dipesh Dedhia

The same response for you also Mr. Deepesh which I have given to Mr. A. K. Agrawal,

genuine expenditure can not be disallowed mere due to the reason of a technical language of law.

I am a bussiness man. I have purchase a land Rs. 125000 in Cash & Registry in Registrar Office. i am treat this land stock in trade in Balnace Sheet. Can this entry will be disallowable U/s 40 of Excess cah payment above Rs. 20000. plz explain them

Mr.Sudhir,

since the payment is Revenue expenditure. It will be disallowed u/s 40(a)