Exemption to sec 40a(3)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 December 2015 Hi All,

The Assessee is an Agriculturist. He sells his Agriculture Produce. He receives Cash in excess of Rs. 20,000.00/- from his Debtors(who aren't agriculturist). Now is the Assessee restricted in accepting Cash in excess of Rs. 20,000.00/- from his Debtors under any section of the Income Tax Act. And whether the Debtor is restricted from making payment in cash in excess of Rs. 20,000/- for purchase of Agriculture produce from the Agriculturist or is it covered under Rule 6DD which specifies exemption to Sec 40A(3).

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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21 December 2015 Section 40A(3) is relating to deduction of expenditure. Section 28 is relating to income. As per my knowledge section 40A(3) is not applicable for receipts against sales or receipts from debtors.

Querist : Anonymous

Querist : Anonymous (Querist)

21 December 2015 Sir, Thanx for your reply.
Sir, I also wanted to know whether the Debtors are restricted from making payment in Cash in excess of Rs. 20,000/- towards purchase of Agriculture Produce from the Assessee by virute of Sec 40A(3) or is it covered under any exemption to Sec 40A(3)?

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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21 December 2015 Cases and circumstances in which a payment or aggregate of payments exceeding twenty thousand rupees may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft are provided in Rule 6DD of Income Tax Rules, 1962. It includes agricultural or forest produce.

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