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

Replies (11)

yes it is applicable

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

 YES SECTION 40 (A)(3) IS APPLICABLE.

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

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

 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.

 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

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.

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

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

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

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
19 October 2026
Accountants/Articles (Freshers/Experienced)

ADY & CO.

New Delhi

Graduate (Any)

View Details
Company
08 October 2026
Accounts and Tax Associate

POOJA R TELI & CO

Pune

CA Inter

View Details
Company
ARTICLESHIP 23 October 2026
CA Articleship / Article Assistant

M N Rao & Associates LLP

Vijayawada

CA Inter

View Details
Company
16 October 2026
CA article trainee

Zerdi & Co. Chartered Accountants

Pune

CA Inter

View Details
Company
15 October 2026
Senior Accountant

Continental Belting Pvt Ltd

Mumbai

B.Com

View Details
Company
ARTICLESHIP 23 October 2026
Articled Trainee

J Y & CO

Hyderabad

CA Inter

View Details
Company
13 October 2026
Accountant

Zerdi & Co. Chartered Accountants

Pune

B.Com

View Details
Company
14 October 2026
Accountant

Rize.farm

Bengaluru

B.Com

View Details