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Krishna Prasad (Partner)     24 August 2009

Applicability of Sec-40A(3) of the IT ACT,1961

X LTD PURCHASED GOODS ON CREDIT BASIS. AFTER THAT X LTD  PAID THE AMOUNT IN CASH EXCEEDING Rs.20000/- TO THE CREDITOR BY DEPOSITING DIRECTLY IN TO THE BANK ACCOUNT OF THE CREDITOR.

 

IS SEC - 40A(3) APPLICABLE TO THOSE TYPE OF TRANSACTIONS



 11 Replies

prateek

prateek (CA Final)     24 August 2009

yes it is applicable

Giridharan K

Giridharan K (Student)     24 August 2009

Yes it is applicable.  Since the payment is made directly to the bank a/c of the creditor no disallowance comes.

RITESH KOTHARI

RITESH KOTHARI (B.COM, FCA, DISA(ICAI))     24 August 2009

 YES SECTION 40 (A)(3) IS APPLICABLE.

CA Kingsley

CA Kingsley (Audit Manager)     24 August 2009

 No no. It doesnt come under 40A(3). It comes under exemption as per rule 6DD

ca tarun sharma

ca tarun sharma (SERVICE)     24 August 2009

it will be disallowed u/s 40A(3) since payment is made by other than a/c payee cheque or bank draft it will be treated as payment made in cash because it is irrelevant who deposit cash in bank and also there is no identification of source of receipt

CA Kingsley

CA Kingsley (Audit Manager)     25 August 2009

 Sir,

there are lot of cases of exemption where in if you pay such a manner, then 40A3 will not be applicable even though you dont pay by account payee cheque or draft like payment during bank strike, payment to agricultural people, payment thro depositing in bank account etc.  These list comes under rule 6DD. I kindly request the others to go thro rule 6DD which contains those explanation.

CA NEETHU JOY

CA NEETHU JOY (Executive KPMG)     25 August 2009

 plz follow this link.... but i couldnt find this particular exemption..... Do check out.../forum/messages/2008/10/15526_rule_6dd_of_income_tax.asp

Chitrank Jain

Chitrank Jain (Senior Manager - Group Internal Audit)     25 August 2009

Please go through Rule 6DD, it clearly states that any payment made to a banking company is exempt from section 40A(3).

here motive is not know the identity of depositor rather it is to make it difficult for the payee to hide his income/assets.

rohit bansal

rohit bansal (article)     25 August 2009

Yes, it will be disallowed u/s 40a(3).

Sumit Jain

Sumit Jain (CA)     25 August 2009

 yes, it will be disallowed u/s 40a(3)

NAMAN SINGHAL

NAMAN SINGHAL (CA final , CS final)     09 September 2009

it is disallowed u/s 40A(3),


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