Cash Payment >Rs.20,000/-

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Manish (Querist)
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10 March 2008 Should the Traders/ Contarctors/ Transporters showing profits u/s 44 AD/ 44AE or 44AF should also take care while paying for expenses more than Rs.20,000/- in cash.

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)
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10 March 2008 YES,PAYMENT EXCEEDING RS20000/- SHALL BE DISALLOWED IN SUCH CASES ALSO

pushpendra

pushpendra (Expert)
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10 March 2008 Yes because in these sec only sec. 30 to 38 is exempt sec. 40A(3) is not exempted.
so. take care of cash payment of 20000 or more.

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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10 March 2008 When income is estimated on gross profit rate, no disallowance can be made - When the income of the assessee was computed by applying a particular gross profit rate and when no deduction was allowed in regard to the purchases of the assessee, there would be no need to look into the provisions of section 40A(3) and rule 6DD(j) - CIT v. Banwari Lal Banshidhar [1998] 229 ITR 229 (All.).

CA. GOPAL SONIKA

CA. GOPAL SONIKA (Expert)
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10 March 2008 yes

CA Praveen Chopra

CA Praveen Chopra (Expert)
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10 March 2008 Yes section 40A(3) will apply to cases covered under section 44AD/AE/AF.

Manish

Manish (Querist)
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10 March 2008 Thanks everybody.
Yes, technically sec 40A(3) will apply. But how far it has teeth for an AO, as in such instances assesse can always claim that he has already taken care of such payments > 20,000, and while considering the Profit declared and rate of Profit (5 % or 10%) he/she has already adjusted the impact of non-allowable expenses u/s.40A(3).
CA Sampat Jain's reply/suggestion is also important. Experts, Please Guide.

pushpendra

pushpendra (Expert)
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11 March 2008 Thanks C.A. Sampat jain

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