40A(3)

Hi..

can any one clarify my doubt in applying the provisions of sec 40A(3)  for the following case:

 

XYZ , a firm carrying Construction business pays Rs.100000 to the person in charge of particular site being employee of the firm, and he inturn pays 

a) 56000/- to a mason 

b) 15000/- to plumber

c) 9000/- for purchasing sand

d) 19000/- for electrical work done

All these transactions took place on a single day..

And my main query is :

When 40A(3) should be applied , whether at the time of paying 100000/- or the  subsequent payment..?

Replies (2)

Payment in cash should not be more than Rs.20000/- in a day to a single person and against one invoice.

40A(3) should be applied at the time of  payments to individual invoices or persons in this case not for Rs.100000.It does not matter if u paid directly or through employee.It will attract 40 A(3)

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