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Cash of more then 20000

1091 views 7 replies

CA ANAND JINDAL

Professional

137 Points Posted on 25 February 2010

Cash of more then 20000 deposited into the account of creditor will be disallowed u/s 40A (3)

If payment towards any expenditure exceeds Rs 20,000, it must be by means of account-payee crossed cheque or draft. If not, the entire expenditure is not eligible for deduction.

The monetary limit of Rs 20,000 is prescribed in Section 40A(3) and there are certain exceptions to the disallowance, which are mentioned in Rule 6 DD.

Cash payment by the buyer into the bank account of the supplier of merchandise does not fall within the exception and, hence, liable for disallowance. In the K. Abdu & Co vs ITO (2008 170 Taxman 297 Kerala) case, cash payment into the bank account of the supplier was held as breach of Section 40A(3) and liable for disallowance.

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CA.Parminder Singh

Ludhiana

Replies (7)

CA Manikandan Raghunath

609 Points Posted on 25 February 2010

Thanks for sharing sir

abhishek

Internal Auditor

181 Points Posted on 25 February 2010

good morning sir ...

can we pay any revenue expenditure in cash on same day above 20000/- through two or more cash memos from same party..?

is above section applies to this case...?

Harish Arora

Chartered Accountant

52 Points Posted on 25 February 2010

NO ABHISHEK

What you can do you can get two cash memo for two different days from the same party.

Suresh

CA Final Student

177 Points Posted on 25 February 2010

Mr.Abishek u cant ,,u do raise vouchers for different dates..

saranraj

CA FINAL

419 Points Posted on 25 February 2010

YOU CAN ASK THE SUPPLIER TO GIVE DIFFERENT BILLS OF WHICH EACH OF THEM DOES NOT EXCEED Rs. 20,000.

RAJEEV

article

156 Points Posted on 25 February 2010

IN A Y 2010-11 payment for plying and hiring rs 20000 shall be taken Rs 35000

CA Priya

CS Final

1049 Points Posted on 25 February 2010

Hey........ The sec says disallowance will happen if an expense which is charged of against revenue in yr P&L a/c and the cash should not be paid for One person towards SINGLE EXPENDITURE........