Cash payment of rs.20000

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manik (Querist)
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08 August 2011 our's is construction co. , we have many contractors working for us and on some of the sites the contractors are common. as per the company policy ,payments are given to contractors in cash on 7th of every month at each site separately. my question is there are cases in which similar contractor is receiving payment in cash at different sites for respective work done on that site . will it will attract dis-allowance u/s 40A
(3)? what is the remedy for it?

MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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08 August 2011 Dear Manik,

As per my view, if the payment made to contractor against different bills/invoices which are less than Rs.20K, then section 40(A)(3) will not attract but if payment has made for single work, no matter if payment made at different sites, but if it exceeds Rs.20K, then section 40(A)(3) will attract.
Remedy is you can make payment on different dates below Rs.20K

manik

manik (Querist)
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08 August 2011 as the same contractor is working at different sites and is submitting different bills for each site which might be of more or less of rs 20000.then what will be the consequences

MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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10 August 2011 Hi,

In that case you cann't pay more than Rs.20K against each bill each day. You will have to pay on different dates.

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