one more query in respect of section 40A(3)

This query is : Resolved

CA Umashankar Vaishnav (Querist)
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21 February 2009 RESPECTED SIR ,
MAY I HAVE ONE QUERY IN RESPECT OF INCOME TAX “ PROFIT & GAIN OF BUSINESS AND PROFESSION “ . IN IT UNDER SECTION 40(A) (3) IF ANY EXPENSES ( PAYMENT) BY MEANS OF CASH PAYMENT( EXCEPT BY AN ACCOUNT PAYYEE CHEQUE OR AN ACCOUNT PAYEE BANK DRAFT) EXCEED RS. 20000 /-
THEN SUCH EXPENSES MAY BE 100% DISALLOWED AND NOT DEDUCTIBLE.
[ AMENDMENT IN FINANCE BILL 2008]

[ UPTO THE FINANCE BILL 2006 IT MAY BE ONLY 20% DIS-ALLOWED]

NOW , FOR A BUILDERS ( AN ASSESSE ) POINT OF VIEW LAND BEINGS ITS STOCK IN TRADE . IF IT MAKE A CASH PAYMENT IN A PREVIOUS YEAR 2008-09 ( ASSESSMENT YEAR 2009-10) FOR REGISTRY OF LAND TO A REGISTRAR OF RS . 65000.00 . THEN IT BEING A REVENUE EXPENDITURE AND IT REFLACT SECTION 40A(3).

SO, PLEASE TELL ME THAT WHETHER SUCH EXPENDITURE ARE TO BE ALLOWED AS DEDUTIBLE EXPENDITURE OR NOT . UNDER THE INCOME TAX ACT 1961.

K V Subba Rao

K V Subba Rao (Expert)
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21 February 2009 Registration Expenses are remitted into Bank (as specified by Registrar's Office) to obtain Challan

Exceptions list includes payments to Central and State Govts.

So there is no problem of disallowance

Ref: Para 49.3.1 of 31st edition of Singhania's Ready Reckoner