Section 40 A 3 of the Income Tax Act, 1961

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piyush chande (Querist)
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11 June 2009 Payment should be made by Account payee cheque only, for Purchase of goods whether it means that payments should be made to the Purchaser only, and not to third party on behalf of purchaser.

By amendment in the Taxation Law (amendment) Act, 2006, the word "an account payee cheque or an account payee draft" was substituted for the word "a crossed bank cheque or a crossed bank draft"

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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11 June 2009 Yes, even the payment made to a third party on behalf of purchaser ia a payment made to the purchaser.

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
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11 June 2009 agree with the expert

MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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11 June 2009 Sec. 40A(3) is an anti tax evasion measure.By requiring payments to be made by a/c payee instrument, it is possible to verity genuineness of the transactions and hence it is mandatory to pay through a/c payee intruments only to avoid disallowances of the expenditure under income tax act.

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