Sec 40 a (3)

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This query is : Resolved

anup (Querist)

11 September 2013 1).If a company purchases capital goods/goods from its creditors on credit, can it make payment in cash above Rs. 20,000.
2).And can wages/labour charges payment be made in excess of Rs. 20,000 if wages payroll is not maintained.
3). Can cash payment above Rs. 20,000 be made to Govt. Dept like Sales Tax Dept.

(The answer to the above queries are affected by A.Y or not, because i need to know about FY 10-11.)

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

11 September 2013 1. Sec.40A(3) not apply for the expenses and other payments which not claimed as deductions u/s.30 to 37. so asset purchase is not comes under sec.40A(3)

2. Yes. will apply, and the wages will be disallowed

3.yes. government payment such as tax payment not covered u/s.40A(3)

CA Pallav Singhania

CA Pallav Singhania (Expert)

11 September 2013 Section 40A(3) of Income Tax Act 1961 provides for disallowance of expenses in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on bank or account payee bank draft, exceeds Rs 20000.

However, payment to Govt. not covered under the Act.

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