40 A (3)

 Limit applies to all items in a bill, and not to individual items - Section 40A(3) concentrates on the size of the payment and the manner of the payment. If different items are included in a single bill, it would not be right to dissect the bill and find out whether each item of expenditure is above the limit; the proper way is to read the entries in a wholesome fashion - Addl. CIT v. Shree Shanmuga Gunny Stores [1984] 146 ITR 600 (Mad.).

dear Hareesh. i agree that there is a word aggregate of payments in the section. but there is also word- IN RESPECT OF SUCH EXPENDITURE.

So if aggregate of payment are in respect of SUCH  expenditure then we have to apply the section.

rather than discussing a lot in detail, i would like to tell you that the above treatment is given by Dr. Girish Ahuja. so accept this.

Originally posted by : Shashi Bhushan
	dear Hareesh. i agree that there is a word aggregate of payments in the section. but there is also word- IN RESPECT OF SUCH EXPENDITURE. So if aggregate of payment are in respect of SUCH  expenditure then we have to apply the section.   rather than discussing a lot in detail, i would like to tell you that the above treatment is given by Dr. Girish Ahuja. so accept this.

Dear Shashi, opposite view is taken by T N Manoharan.

But thanks. at least you have made the effort to substantiate your stance with a case law.

Hareesh, this case is valid for the assessment of previous years upto 2007-08.

The case you have mentioned is attached on the third page of this thread, first post.

It shows clearly that the individual expenditrue need not be above the limit prescribed. Please go thru the full judgement.

Don't be sorry G.K.!!!

Anyways, thanks for such kind of debate on this matter.............

"Where thee assessee incurrs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure"

acc. to me it is not disallowed

Originally posted by : PRADEEP & SUDHIR JI
	"Where thee assessee incurrs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure"   acc. to me it is not disallowed

 after reading all the discussions and case laws... i think many of us had to refer through various books and case laws .However suffecient evidence is provided by GK , therby making me more lazy , and it can be summed up by saying that

" if in a day payment exceeds Rs20,000 to a single party in cash , irrespective of the number of transactions involved , the whole of such expenditure relating to that particular day and to that particular person will be disallowed. " i think i need not qoute under which section of the income tax act...

correct me if i am worng somewhere.

and GK extremely gud work but you shud have chosen to reply it in a better language may be a little more softer english.

this discussion / war / etc....  would have ended far earlier.

just to correct a few others -- we can only play with law but not manipulate the terms of law as per our own understanding levels.i doubt if this is the case then why law...?

Dear Mahesh,

I think you are also T N Manoharan Fan....

I have been taking a view of what is proper intention of law maker, not what exactly the law says,i.e., the view i took initially is wrong.

One thing that made me realise i am mistaken is discovering that law is first constructed, then interpreted if there is a confusion, not the other way round.

Why law?

English is not written the way it is spoken.

English is not read the way it is written.

English is not understood the way it is read.

Law is not constructed the way English is Understood. 

Where necessary, law is interpreted in a way different from the way it is constructed.

The last step was not necessary in this case cos the construction was straight forward, and there is no need to resort to interpreting the lawmaker's intent. In a tax statute, the interpretation is on the basis of what is the literal construction, not what the person drafting the act has in mind.  Tax law is interpreted only to the word.

Any other interpretation is either liberal or incorrect. The Case on section 54 is a liberal view in my opinion as of now.

Anyway I am glad to have cleared my doubt for this topic....

Thanks and heartfelt sorry to all.

Dear G.K,

First of all I really appreciate that you had said sorry in an open forum like this.

Secondly, brother the arguments you had made were really awesome, I mean you had put your points after a good home work.........good work bhai and keep it upp......