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Cash disallowance u/s 40a(3)

CA Hardik Bunha (self) (2121 Points)

06 September 2011

HI,

IF CASH PAYMENT MADE FOR EXPENSE IS RS. 19,999.51

SECTION 288A APPLY

SECTION 40A(3) REFERS EXCEEDING 20,000.......

IT IS ALLOWABLE OR NOT...............

IF YES TAG CASE LAWS.

NOTE:: PLEASE STUDENTS KEEP AWAYS FROM THIS ONLY EXPERTS WELCOMES...........

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10 Replies

Desi Mojito (Chartered Accountant) (142 Points)
Replied 06 September 2011

Even if Sec 288A gets hit, the amount will be Rs 20000. Sec40A(3) wont get attracted as it refers EXCEEDING Rs 20000. Thus, it wll be allowed.

student (accounts) (131 Points)
Replied 06 September 2011

what about 51 paise??????????????????????????

(Guest)

Learned hardik

Section 288A is applicable to rounding off total income. S 288A do not apply to section 40A(3) or any other sections. Therefore no question of rounding off.

Payment made 20,000.50 section 40A(3) gets attracted.

Thanks

https://taxbykk.blogspot.com/

for easy reference reproducing section 288A as it is

Rounding off of income.

The amount of total income computed in accordance with the foregoing provisions of this Act shall be rounded off to the nearest multiple of ten rupees and for this purpose any part of a rupee consisting of paise shall be ignored and thereafter if such amount is not a multiple of ten, then, if the last figure in that amount is five or more, the amount shall be increased to the next higher amount which is a multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten; and the amount so rounded off shall be deemed to be the total income of the assessee for the purposes of this Act.

1 Like

TRILOCHAN (SENIOR ACCOUNTANT) (698 Points)
Replied 07 September 2011

Even cash Paid Rs.20000/- was allowed U/s40a(3).

Ramanuj (Accountant.) (834 Points)
Replied 07 September 2011

If cash paid above of Rs. 20000/- then its Disallowed U/s 40a(3).

achyuthanand (Audit executive/ CA Final) (283 Points)
Replied 07 September 2011

how did u pay 51 paise as cash?..practicaly impossible..

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 07 September 2011

Agree above..Sec 288A applicable for rounding of rupee in multiple of Rs 10,paisa ignore.

There is no link to Sec 40A(3)...This Sec is applicable when payment of cash exceeding Rs 20000..to single person in same day.

HERE IS Rs 20000 not cxceed, so allowed exp.

ravi Joshi (manager) (29 Points)
Replied 05 October 2013

if cash paid Rs.20000/- in 3 days against purchase of 60000/- then it is allowable or not ??????

yuvraj kathuria (hissar) (53 Points)
Replied 19 February 2014

Yes, If payment of Rs. 20,000/- is being made in 3 consequent days, then that is allowed as payment should not be more than Rs 20,000/- in single day.

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 19 February 2014

Sec288A dealt with rounding of Total taxable income but not relate to every transaction(Income or Expenses) in process of accounting and furthur as our experts said even cash payment up to rs.20000 will be allowed! and coming to sec288A,if last digit of total taxable income is 5 or more then it will be rounded by adding a number that will let last digit to "0" i.e as in your case of rs19999.51 assume it is total income/Loss,it will be rounded off to 20000(Last digit>5,Add"1" to make last digit "0") and in case if last digit is less than5,Make it "0" by subtracting required number