Section 40(a)(3)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2013 Purchase amt to rs. 50 Lacs.

cash payment made on next day is 10 lacs.
after three days, payment made by cheque balance amt.i.e. 40 lacs.

what will be disallowance amt. 10 lacs or total 50 lacs.

pls answer by stating any case law for the same.
because answer is 10 lacs but no case law i found..

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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08 April 2013 Only Rs. 10 lacs will be disallow.

OM SAI SRI SAI JAI JAI SAI

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2013 I Know the answer, but what i want is case law if any regarding the same.

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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08 April 2013 Pls clarify that the Amount of Rs.50 Lacs is a single bill or Total of all bills

and payment of Rs.10 Lacs is against which bill & its amount (if there are more than single bills)

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2013 suppose:-

>payment is against more than single bill.

or

>50 lacs is single bill. ?

tell me in both case.

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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08 April 2013 if 50 Lacs is single bill

The Whole amount would be disallowed

but if the payment of Rs.10 Lacs is against more than single bills
then the amount of bill against which Rs.10 Lacs is paid would be disallowed

i.e. suppose if bill amount is Rs.15 Lacs
against which Rs.10 Lacs is paid in cash

then Rs.15 Lacs would be disallowed

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2013 50 lacs is bill, and paid 10 lacs in cash and balance in cheque.

you mean to say 50 lacs will be disallowed ?
i am not agree with this ..
can you state any case law here to prove it....

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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08 April 2013 no sorry i meant that only the cash payment would be disallowed
i mean Rs.10 Lacs
CIT v. Aloo Supply Co. [1980] 121 ITR 680

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2013 thanks.
but any other latest case law.
asking because its very old one.

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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08 April 2013 i would try finding the latest case laws

but i would like to tell you that this provision has various loop holes
so now a days there are no case laws relating to this section.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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09 April 2013 If payment is made partly in cash and partly by way of cheques, disallowance will apply only to the cash portion.

Citation :- H.A. Nek Mohamed and Sons Vs. CIT (1982) 135ITR 501 (All).

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