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Clarification regarding freight paid included in purchases.

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(Querist)
17 February 2018 A ltd purchased raw materials from Mr.B for Rs.5,40,000/-, which includes freight of Rs.40,000/-. No separate entry regarding Carriage inwards is made in books of accounts. The entire amount was charged to purchases A/c. But however freight of Rs.40,000/- was paid in cash in a single day. Will such amount paid in cash be disqualified U/s 40A(3)? and attract provisions of Sec 194C?.
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RAJA P M

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RAJA P M (Expert)
17 February 2018 It's disallowed as per recent amendment...
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CMA Poornima Madhava

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CMA Poornima Madhava (Expert)
17 February 2018 Since cash payment exceeding Rs.10,000 is made in a day, the entire amount would disallowed. Further, since freight charges are included in the invoice and the same is treated as cost of purchase, provisions of section 194C may not be applicable. View of others welcome.
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RAJA P M

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RAJA P M (Expert)
17 February 2018 Yes.. Section 194C not applicable.
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