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Sec. 40(a)(3) payment disalllowed or allowed

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Querist : Anonymous

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Querist : Anonymous (Querist)
08 June 2012 Dear All,
My client Paid a freight payment to xyz transporter amount Rs. 45000/- in single day against separate bill 1, 2 & 3 each Rs. 15000/-.
I want to know if my client paid 45000/- in single day against separate bill 1,2,3 then it will be allowed expenditure or disallowed.
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
08 June 2012 The expenditure will be allowed because Section 40A(3) also applies to aggregate of payments made in a day.
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CA PRAVEEN SINGH

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CA PRAVEEN SINGH (Expert)
08 June 2012 EXAMPLE :To illustrate with an example, let us assume a taxpayer has incurred an expenditure of Rs 40,000/-. The taxpayer makes separate payments of Rs 15,000/-, Rs 16,000/- and Rs 9,000/- all by cash, to the person concerned in a single day. The aggregate amount of payment made to a person in a day, in this case, is Rs 40,000/-. Since, the aggregate payment by cash exceeds Rs 20,000/-,Rs. 40,000/- will not be allowed as a deduction in computing the total income of the taxpayer in accordance with the proposed amendment.
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CA PRAVEEN SINGH

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CA PRAVEEN SINGH (Expert)
08 June 2012 EXAMPLE :To illustrate with an example, let us assume a taxpayer has incurred an expenditure of Rs 40,000/-. The taxpayer makes separate payments of Rs 15,000/-, Rs 16,000/- and Rs 9,000/- all by cash, to the person concerned in a single day. The aggregate amount of payment made to a person in a day, in this case, is Rs 40,000/-. Since, the aggregate payment by cash exceeds Rs 20,000/-,Rs. 40,000/- will not be allowed as a deduction in computing the total income of the taxpayer in accordance with the proposed amendment.
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