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40 a (3)

neeraj (CA) (930 Points)

28 May 2012

Cash paid to family members on death of employee amounting to Rs.2 lac .

Is it disallowed under Sec 40A(3) ?

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7 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 28 May 2012

Yes. The same will attract Section 40(A)(3). If the payment satisfies any conditions of Rule 6DD, then the same does not attract disallowance.

Regards,

Devendra Kulkarni

1 Like

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 28 May 2012

Yes disallowed u/s 40 (a)(3)

satish kumar voleti (A.C.A., (ICWAI)) (1686 Points)
Replied 28 May 2012

As per Rule 6DD Terminal benefit to employee - Rule 6DD(h) Where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs. 50,000.

since in your case the amount exceeds Rs. 50000/- hence Disallowance u/s 40(A)(3) will attract...................

Mukesh Kumar Singh (CA-FINAL) (4094 Points)
Replied 29 May 2012

Yes disallowed u/s 40 (a)(3), totally agree with above explaination

KARANDEEP,CA,B.Com,CS FNL (JOB) (457 Points)
Replied 29 May 2012

Originally posted by : satish kumar
	As per Rule 6DD Terminal benefit to employee - Rule 6DD(h) Where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs. 50,000. since in your case the amount exceeds Rs. 50000/- hence Disallowance u/s 40(A)(3) will attract...................

Agreed with Satish..

neeraj (CA) (930 Points)
Replied 30 May 2012

thnx a lot to all of u

Dhrumin (Tax Article) (21 Points)
Replied 09 August 2012

Suppose on 1/4/2012 i made a crdit purchase of Rs.15000/- and then on 5/4/2012 i made a credit purchase of Rs.10000/- from a single party taken as "A". Now in my books i will be having a liability of Rs.25000/- to be payable to A. Now on 10/4/2012 i make a cash payment of Rs.25000/-. Please help me out that will such cash payment of Rs.25000/- which is more than Rs.20000/- be disallowed under section 40(A)(3) or not?