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Disallowance under sec 40 (A) (3)

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(Querist)
10 September 2008 Is Electricity Bill of Rs 57120 paid in cash to MSED on a single day is disallowable under section 40 a 3
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Taxguy

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Taxguy (Expert)
10 September 2008 It should be allowable, but why paid in cash, any specific reason, then it should be as provided in Rule 6 DD j
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Sushant Panigrahi

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Sushant Panigrahi (Querist)
10 September 2008 They has paid on the last date and to avoid penalty, payment was made on cash
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CA.PRAMOD KUMAR PANDA

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CA.PRAMOD KUMAR PANDA (Expert)
13 September 2008 Electricity is an expenditure allowable as deduction U/s 28 to 38 of the I.T.Act. Section 40A(3)provides for disallowance of such expenditure paid in cash exceeding Rs.20000/- and payment of Electricity is not excluded under Rule-6DD. Considering your facts, the AO may exercise his discretion in not making any disallowance considering the business prudence involved in to it. However in such case you may have fair chance of winning the case in Appeal.
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