sec 40(A)3
This query is : Resolved
CA CS Nataraju.S
(Querist)
05 August 2010
Dear sir/ madam
is sec40(A)3 disallowence provision applicable, if a person withdraw cash from his account and deposited the same to the creditor bank account in excess of Rs20000, on same day.
is sec40(A)3 disallowence provision applicable, if a person withdraw cash from his account and deposited the same to the creditor bank account in excess of Rs20000, on same day.
05 August 2010
Yes.
CA Sanat Pyne
(Expert)
05 August 2010
yes sec40(A)3 will be attracted.
CA CS Nataraju.S
(Querist)
05 August 2010
thank you.
VINOD ARORA
(Expert)
05 August 2010
This is supposed to be disallowed under Rule 6DD, as the payment has been made by violating the required mode of payment, i.e. by accountt payee cheque/draft.
In fact this Rule enforces the continuity of chain of source and destiny of payments, which helps IT deptt conclude certain mattters. In the given case funds flow trail hass broken.
In a similar case-law (K. Abdu & Co. V Income-tax Officer)a writ petition came before the court. The petitioner made payments in cash by way of deposit of money in bank accounts of suppliers maintained with State Bank of Mysore and Hassan District Co-op. Central Bank Ltd. Assessee claimed that the payment was made to banks and therefore they were exempt from disallowance under section 40A (3) of the Income-tax Act, 1961 in views of Rule 6DD (a) (ii) of the Income-tax Rules, 1962. The court held that only payments made to specified banks or institutions in the Rule will be eligible for exemption and not any payment made to any other party who maintained account with bank. Therefore, deposits made in bank accounts of suppliers were not eligible for exemption from disallowance under section 40A(3).
In fact this Rule enforces the continuity of chain of source and destiny of payments, which helps IT deptt conclude certain mattters. In the given case funds flow trail hass broken.
In a similar case-law (K. Abdu & Co. V Income-tax Officer)a writ petition came before the court. The petitioner made payments in cash by way of deposit of money in bank accounts of suppliers maintained with State Bank of Mysore and Hassan District Co-op. Central Bank Ltd. Assessee claimed that the payment was made to banks and therefore they were exempt from disallowance under section 40A (3) of the Income-tax Act, 1961 in views of Rule 6DD (a) (ii) of the Income-tax Rules, 1962. The court held that only payments made to specified banks or institutions in the Rule will be eligible for exemption and not any payment made to any other party who maintained account with bank. Therefore, deposits made in bank accounts of suppliers were not eligible for exemption from disallowance under section 40A(3).
CA Sanat Pyne
(Expert)
05 August 2010
IF THE ABOVE PAYMENT IS MADE FOR A SINGLE BILL THEN IT WILL BE DISALLOWED OTHERWISE NOT.
THE PRIMARY CONDITION IS SINGLE PAYMENT FOR SINGLE BILL.
THE PRIMARY CONDITION IS SINGLE PAYMENT FOR SINGLE BILL.
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