if i made advance to supplier of Rs.100000/- to buy goods...Is it Disallowable u/40...As i paid >20000...Reply
Rupesh Soni (Taxation Consultant & CA final student) (493 Points)
07 May 2014if i made advance to supplier of Rs.100000/- to buy goods...Is it Disallowable u/40...As i paid >20000...Reply
Deepak Gupta
(CA Student)
(15922 Points)
Replied 07 May 2014
| Originally posted by : Rupesh Soni | ||
 |
if i made advance to supplier of Rs.100000/- to buy goods...Is it Disallowable u/40...As i paid >20000...Reply (I think you mean to say u/s 40A(3), if payment made in cash) |  |
u/s 40A(3), advance payments are also covered.
.
Scope of the word 'expenditure' for the purpose of Sec. 40A(3):
Even if the payments were made by way of advances and were ultimately treated as discharging the liability to pay the price of the goods purchased, the payments so made must be considered to fall within the expression ‘expenditure’ incurred for payment of the price of the goods.
- Kejriwal Iron Stores v. CIT [1988] 169 ITR 12 (Raj.).
.
Therefore, it will be considered as payment made in violation of the provisions of section 40A(3) and no deduction shall be allowed.
Swami Ayyappa Nuli
(TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER)
(1372 Points)
Replied 08 May 2014
Yes,He is correct.It will be disallowed if bill amount exceeds rs20000.So it is advisable to raise 5bill individually not exceeding rs20000 each so that you can make it allowable.Thank you.
sumit jain
(Ca Final Student and Article)
(71 Points)
Replied 08 May 2014
HEM@NT G@RG
(ARTICLE ASSISTANT)
(313 Points)
Replied 08 May 2014
HELLO RUPESH,
AS PER THE SEC-40A(3), IF ANY PAYMENT GIVEN PAYMENT TO A SINGLE PERSON IN A SINGLE DAY MORE THAN 20000 THEN IT SHOULD BE DISALLOWED.
AS PER QUERY U CAN BREAK THE TRANSACTION LESS THAN 20000 AND GIVE PAYMENT IN DIFFERENT DAYS..
FURTHER QUERY U SHOULD ASKED
Rupesh Soni
(Taxation Consultant & CA final student)
(493 Points)
Replied 08 May 2014
CAclubindia
