Query Regarding Section 40A(3)

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CA Babit Khurana (Querist)
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05 April 2010 As per section 40A(3) of IT ACT,1961
where an assesse incurs any expenditure,
for which, payment or aggregate of payments is made to a person in a day is in excess of Rs 20000.
otherwise than for a/c payee cheque then full amount is disallowed.
Question: If i have three bills.
Bill no1 of Rs 15000
Bill no2 of Rs 15000
Bill no3 of Rs 18000.
And i made full payment of Rs 48000, otherwise then for a/c payee cheque whether whole amount is disallowed.
I am little bit confused regarding the word expenditure given in the act.
Whether every expenditure is in excess of Rs 20000.
Pl give reference for the same also.
Thanks in advance.

Zeeshan

Zeeshan (Expert)
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05 April 2010 No nothing will be disallowed.
Expenditure means in section 40 A 3 is a single expense/invoice should not exceed 20000/35000(in case of transporter).
in your example individual exp. is not exceeding the limit of 20000/- hence nothing will be disallowed.

as the disallowablity is only attracted when both Expenditure as well as Payement exceeds 20000/35000.

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