Sec 40 a cash payment limit.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2011 In my case forex (Currency Notes to expenses in foreign county) is purchased by paying certain amount to the Forex dealer in INR.
The entire amount is used and total amount paid to dealer is claimed as foreign tour expenses. First entire amount was paid in cash in excess of Rs. 20000. Should the whole be disallowed u/s 40 A (3)

I am of the opinion the first transaction with forex dealer is of Contra nature. The same should be recorded in books at the rate of changing hands and thereafter individual expense should be tested for 40 A (3) at the rate of purchase in INR.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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08 September 2011 The moment you have purchased forex then what you have done? Have you incurred any expenditure? The answer is NO. the what? You have converted your cash in hand in Indian currency to foreign currency and nothing else.

Thereafter you are incurring expenses and at that time if you are incurring in excess of the limit then this provisions shall apply

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