SECTION 40A(3)

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Eshwar Dharamdas (Querist)
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12 December 2009 CAN ANY ONE TELL.
CAN PAYMENT FOR THE PURCHASES CAN BE MADE IN CASH

AND ALSO EXPLAIN WHETHERE DEPOSITING THE CASH TO THE PARTIES BANK ACCOUNT UNDER CORE BANKING SYSTEM AMOUNTS TO CASH PAYMETN.

CASE.
PARTY DEPOSITED RS 100000 TO THE BANK ACCOUNT OF THE SUPPLIER BY CASH UNDER CORE BANKING SYSTEM WHETHERE THIS AMOUNTS TO CASH PAYMENT

C.A.Amitabh Gupta

C.A.Amitabh Gupta (Expert)
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12 December 2009 No, the payment for purchases cant be made in cash except as referred in rule 6DD. Kindly refer the same.

Amount Rs.1 lacs deposited in cash by purchaser to the bank a/c of supplier would amount to cash payment.It is like the same thing as paying in cash to the supplier and then supplier depositing the same into its bank a/c.This type of payment not as per the payment through the banking system as mentioned in Rule 6DD hence would tantamount to cash payment

Rgds
CA Amitabh Gupta
Indore
ag_ind@rediffmail.com

CA Balram Sharma

CA Balram Sharma (Expert)
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12 December 2009 Yes 40A(3) will be applicable in your case

Purchase is in the nature of exp. hence section 4A(3) will be applicable on purchase.

further section 40(3) applicable if the payment is made in cash,

your case is also treated as payment by cash,