40 A (3)

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Amit Kumar (Querist)

03 July 2016 if a transporter incurred expenditure of rs. 34000 in cash on account of purchase of tyre.as limit is provided upto 35000 for plying, hiring nd leasing is it allowable. each expense limited to 35000 for transporter.

Amit Kumar

Amit Kumar (Querist)

05 July 2016 Still, there is no answer

CA ABHAY GUPTA

CA ABHAY GUPTA (Expert)

05 July 2016 hi Amit... You have wrongly interpretated the section 40A (3)... Section 40 A (3) provides that any expenditure incurred by an assessee above Rs. 20000/- in a day, other than by account payee cheque or draft shall not be allowed as a deduction. However, if the payments are made for plying, hiring or leasing carriages for goods such as lorries, trucks etc then the limit is extended to Rs 35000/-. the law is payment made to not the payment made by person involve in the business of plying and hiring...thus in ur case the cash payment made to buy tyre, the limit is to Rs 20000.. thus expenditure will be disallowed however if its a capital expenditure as its their business then nothing shall be disallowed

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