stupid client or stupid me

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This query is : Resolved

Archit Jain (Querist)

07 February 2009 A Client of ours has received a bill of Rs. 60000 he is making payment in cash. In the books of A/C he is showing it as three different payments made on say 1.1.2009 , 2.1.2009 & 3.1.2009. On 2.1.2009 he has received another bill from the party of say 20000 he is making the payment of same on 2.1.2009. if u notice that on 2.1.2009 the aggregate payment is in excess of 20000. Earlier it was allowed , but as per amendment made in sec 40A(3) it now is disallowed. The staff of client argues that the provision is just for a single bill , in my opinion he is wrong as the act clearly says that aggregate payment in cash in excess of 20000 is disallowed.

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)

07 February 2009 The limit of Rs.20000/- per day to a particular person or company. Therefore if he makes two payments in cash where the aggregate is more than 20000 then it will be disallowed.

Your client may not be knowing the ammendment thereore you show the ammendement to 40A(3) to him as passed by the finance act. He will understand and value your findings.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

08 February 2009 Yes.
Your Client is correct.
The limit is for "per bill" and also "per person".
So if payment is in pursuance of different bills it will be allowed.
Also, if payment is in pursuance of different persons it will be allowed.

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