Cash payment >20000 by deposit in customer bank account

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Anoop (Querist)

08 December 2011 Whether, MULTIPLE cash deposit PER DAY in customer/supplier's BANK ACCOUNT for expenditure exceeds 20000, 40A(3) apply..??

bcoz the section says "otherwise than by account payee cheque / bank draft"...

reply a.s.a.p

thanks and regards

CA VISHAL RANA,CS,B.Com,AMFI

CA VISHAL RANA,CS,B.Com,AMFI (Expert)

08 December 2011 Directly Deposit in supplier's account has same effect as it is paid through account payee cheque because payment by a/c payee cheque will also credit in supplier's a/c as deposit directly credit in a/c.

so as per my view sec 40A(3) will not applicable here.

wait for opinion of other experts

Nirpendra Singh

Nirpendra Singh (Expert)

08 December 2011 yes dear section 40a (3) would not be applicable here

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

08 December 2011 Section 40(A)(3) will be applicable. Not allowed under rule 6DD.

6DD. No disallowance under sub-section (3) of section 40A shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3A) of section 40A where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees in the cases and circumstances specified hereunder, namely :—

(a) where the payment is made to—

(i) the Reserve Bank of India or any banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(ii) the State Bank of India or any subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959);

(iii) any co-operative bank or land mortgage bank;

(iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949 (10 of 1949);

(v) the Life Insurance Corporation of India established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956):

(b) where the payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender;

(c) where the payment is made by—

(i) any letter of credit arrangements through a bank,

(ii) a mail or telegraphic transfer through a bank;

(iii) a book adjustment from any account in a bank to any other account in that or any other bank;

(iv) a bill of exchange made payable only to a bank;

(v) the use of electronic clearing system through a bank account;

(vi) a credit card;

(vii) a debit card.

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