Payments disallowed u/s 40a(3) & 40a(3a)

This query is : Resolved

HIMANSHU (Querist)
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10 March 2013 Dear Sir, please suggest me that if a Bill of Purchase of Rs. 35000 paid into two parts in cash of Rs. 18000 on one day and 17000 on another day whether dis allowance under 40A(3) will be attracted???

Thanks a lot

Nikhil Kaushik

Nikhil Kaushik (Expert)
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11 March 2013 Himanshu,

on the narrow reading of the said section, you may say that no disallowance is warranted.

The splitting of payment over multiple days (howsoever unethical or being used to evade taxes or reporting), should not attract 40A(3).

But I am sure if tax payers continue to resort to such devices, someday the legislation shall be amended to cover such structures too.

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