11 March 2013
Suppose on 11/03/2013 assessee purchased goods from X ltd as stated below; Bill no. Amt 101 10,000 102 15,000 103 10,000 and amt paid on the same day for all bills in CASH i.e.,11/03/2013.whether it is allowed or disallowed as per sec.40A(3)
11 March 2013
For the purchases of goods if the bill amount doesn't exceeded more than Rs 20000 then section 40A(3) doesn't attracts. So for your case no disallow u/s 40A(3) if it is cash purchases.
In case on this day it is credit purchase and on the next or any day after purchase you make total amount of Rs.35000 payment by cash then section 40A(3) disallow attracts.
12 March 2013
"Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure."
The inclusion of words "Aggregate of payments made to a person in a day" makes it apparent that even if payments pertain to multiple invoices, if payment exceeds 20,000 in a day, the same would be disallowed.
12 March 2013
Yes, that condition is applicable for the payment. But the above case is cash purchases for cash purchases section 40A(3) doesn't attracts if the single bill doesn't exceeded Rs.20000. Sir, CA Suraj Lakhotia saying about the payment of expenditure. But the case is cash purchases Please go through the section 40A(3) it gives clarification regarding the cash purchases.
12 March 2013
as per sec 40A(3) payment made include "all payments" and any type of "expenditure" made in a day hence sec40A(3) attracts and CA Suraj Lakhotia sir is right.
As per the Taxman's reconer(book) Under the scope of section 40A(3) the following provision is there:
If any assessee makes payment of two different bills(none of them exceeds Rs.20000(in the case of payment for Plying,hiring or leasing goods carriages w.e.f 1-10-2009 Rs.35000)) at the same time in cash or by bearer or crossed cheque, section 40A(3) is not applicable even if the aggregate payment is more than Rs.20,000(35,000 for some case said above). This is because of the fact that section 40A(3) is applicable only in respect of any "expenditure" which is in excess of Rs.20,000(35,000). In other words,for applicability of section 40A(3) both the payment and amount of bill(or expenditure) alone at one time doesn not exceed Rs.20,000(35,000) section 40A(3) is not attracted.
Based on the above provision and explanation i supporting the query in our case section 40A(3) doesn't attracts to our query. Based on this provision for some of our clients we didn't consider 40A(3) payment while making tax audit for the cash bills doesn't exceeded Rs.20000 for one bill but aggregate of cash bills on that day exceeded Rs.20,000.
So if i am wrong please support your answer with any provision or explanation or case law or etc.... because of i have to correct my self and update my knowledge and has to improve my profession.
"incurs any expenditure" - it does not specify expenditure in one transaction or one bill. Expenditure are broad heads appearing in Profit and Loss account of a business. Salary is an expenditure and so are purchases.
Thus where an expenditure is incurred (in this case purchases) in respect of which payments exceed 20,000 in a day, 40A(3) would be attracted.
12 March 2013
Sir, You said link case relates to the credit purchases first made and later that paid through cash. I.e amount paid to creditor in such case i also agree to apply of section 40A(3).
But our case is cash purchases in a single day with different bills but no bill exceeded Rs.20000. But you said case is credit purchases as well as on different dates but cash paid by more than Rs.20000 on a single day for that case section 40A(3) applies i also agree with that. But what i am saying is if cash purchases in a single day exceeding Rs.20000 with different bills but no bill amount doesn't exceeded Rs.20000 in such case section 40A(3) doesn't applicable that is i am saying. Please compare the question at the link provided by you and the question at our case and then analise and understand the difference and cases and answer me with comparision of provision said by the taxman's book i said above my reply. Sir, i am not arguing with you just i requiring clarification and confirmation and differentiation of situations and correct solution with proper support. I am sorry if i hurt you, and please excuse me if i making problem to you.
13 March 2013
But according to the taxman's book it saying section 40A(3) doesn't apply to the cash purchases if a single bill doesn't exceeded Rs.20,000/- So the explanation to the section 40A(3) as per the taxaman's book may be wrong.
13 March 2013
Is any case laws in your knowledge regarding on this query because of different view then we have to base any case law. If you have any case law please provide me.
13 March 2013
if its not relate to purchase and its reltate to other bill {i.e.,repair)& same query as above? then it will be allowed or disallowed as per sec40(a)
13 March 2013
if bill dated on 13/03/2013 amt Rs15000 & on 15/03/2013 amt Rs 15000 & payment made on 17/03/2013 (i.e.,Rs30000) then it would be allowed or disallowed as per sec40A(3)
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