Cash payment

This query is : Resolved

T.M.Prabu

T.M.Prabu (Querist)
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14 May 2013 Is allowable or not the following payment as per income tax act?

1.cash paid to sundry creditors for the amount of babove 20000

2.cash paid to sakthi steel company for the amount of 50000

3.cash paid to saratha for the amount of 100000 because of repayment of loan

CA Sourabh Agarwal

CA Sourabh Agarwal (Expert)
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14 May 2013 2) Not allowed if paid on single day.

3) Repayment of loan is not debited to P/L. How the question arises as to allowability.

Guest

Guest (Expert)

14 May 2013 For payment made in point 1 & point 2,

Section 40A(3) is applicable, however other sections of IT Act also applicable, but you have asked for 40A(3) specifically.

Section 40A(3): Where payment or aggregate of payment made to a single person on a single day is made other than by account payee cheque or account payee demand draft is made on a single day and exceeds rs 20000, then such expenditure is disallowed under the act.

hence if payment is made to the single debtor or single creditor or to steel company, on a single day then such amount is disallowed otherwise not.

For point 3, Expert Sourabh Aggarwal gives correct reply

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