Section 40A(3)
This query is : Resolved
23 June 2011
If a person has made payment of Rs 39000 to a contractor by depositing money in his bank account, will this amount be dissalowed?
23 June 2011
It depends upon the fact that the whether the -
1. Money deposited is in connection with a business contract for which claim of expenditure is being made by him. In this case the expenditure will be disallowed.
*
2. If the contractor receives the money and says that 19500/+19500/- received by him on 2 different dates (Aaj aur kal)
then the expenditure may be allowed.
*
If the contract is of personal in nature say for construction of residential house,
nothing is disallowable as no ependiture is being claimed by the assessee.
1. Money deposited is in connection with a business contract for which claim of expenditure is being made by him. In this case the expenditure will be disallowed.
*
2. If the contractor receives the money and says that 19500/+19500/- received by him on 2 different dates (Aaj aur kal)
then the expenditure may be allowed.
*
If the contract is of personal in nature say for construction of residential house,
nothing is disallowable as no ependiture is being claimed by the assessee.
23 June 2011
Sir with all due respects will it not be treated as payment made to bank allowed under rule 6DD
23 June 2011
And olso can u plz tell if payment in cash is made for payment of electricity bill and exceeds 20000 will it be disallowed
24 June 2011
In Sri Renukeswara Rice Mills v. ITO (2006) 8 (II) ITCL 191 (Bang-Trib) It was held that payment in cash made directly to bank account of payee is not a direct payment to payee but only to credit of bank account without payee actually receiving cash and, therefore, such payment was not made in violation of section 40A(3) and, thus no disallowance could be made.
CA MANOJ GUPTA
JODHPUR
09828510543
CA MANOJ GUPTA
JODHPUR
09828510543
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