Quary regarding sec. 40A(3) & Sec. 269SS

This query is : Resolved

Baldev Sharma (Querist)
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11 June 2009 I am a businessman.I purchase goods from calcutta, chenai, delhi, banglore payment of purchased bills are made by sroff(Financer) to the relevant parties by cheques and thereafter the same is repaid by me to the sroff (financer) by cheque after 10 to 15 days with interest.

Now my auditor raising a query that the above amount will be treated as loan which is not accepted by account payees cheque and hence the transaction is against the provision of Income Tax Law i.e. section 269SS.

The second query reised by the auditor is that the payment to the parties against purchased is not by account payee cheque which is also against the provision of Income Tax Laws i.e. section 40A(3)

Kindly give me the solution about the above queries and let me know whether the auditors view is correct or not

Aditya Maheshwari

Aditya Maheshwari (Expert)
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11 June 2009 Sir you have asked the same query in two sections. It has been answered in the income tax segment.
The link if you cannot find it
https://www.caclubindia.com/experts/experts_message_display.asp?group_id=190783

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