Section 40A(3) - Scope

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ahmeshere (Querist)
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13 October 2010
If an assessee makes a contribution under section 35(1)(ii)/(iia)/(iii) of an amount exceeding Rs. 20,000 in cash, will it attract disallowance under section 40A(3).

Can a contribution be considered to be an expenditure within the meaning of section 40A(3), since section 40A(3) provides for disallowance in respect of the expenditure which is otherwise deductible u/s 30 to 37.

What constitutes "Expenditure" within the meaning of sec 40A(3). Kindly explain the scope of sec 40A(3)(i.e., to which sections/provisions of the ACT does the abovesaid section apply and what are the sections/provisions which are not covered within the ambit of the abovesaid section.

Detailed explanation (quoting the relevant sections/rules) is requested.

Manish Kumar Drolia

Manish Kumar Drolia (Expert)
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14 October 2010 First it is to be understood that sec 40 A (3) does not over ride sec 30 to 37. Its vice versa any ways. In case an amount exceeding Rs. 20000.00 is incurred in cash then the 100% of expenses are disallowed. For expenses disallowed u/s 30 to 37 sec 40 A(3) does not apply itself.

ahmeshere

ahmeshere (Querist)
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15 October 2010 Mr. Manish

Thank you for replying.
But I am not quite clear with your answer.
Do you mean to say that a contribution u/s 35 in excess of Rs.20,000 will be disallowed.

Kindly go through each part of my query again and reply explaining in detail.

Thanks again.

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