Mahesh Chalse (CA Final Student) (56 Points)
22 May 2010Hey friends, if cash payment of more than Rs. 20000/- is made for electricity, telephone & internet charges, is it disallowed under Sec. 40 A(3) of the income tax act.
Sanket Damodar Karve
(Business)
(179 Points)
Replied 22 May 2010
Hi, Mahesh,
Payment made to Government(Both Central & State), if under the rules framed by it, such payment is required to be made in legal tender [ Rule 6DD (b)] Exception to Sec 40 A(3)
Hence the about the payment asked by you will not attract Sec 40 A(3).
Regards
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 22 May 2010
Ofcoarse it is disallowed... Why it will be allowed???
I mean, what makes u think that it will be allowed....???
If u wud have been some proprietor or CPT student, i wud not have wondered ur Q.. But you are A FINAL STUDENT... u sure u r in finals or wat???
daya shankar singh
(CA ,CS)
(629 Points)
Replied 22 May 2010
yes. As per sec 40A(3), Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds Rs 20000, no deduction shall be allowed in respect of such expenditure
Sanket Damodar Karve
(Business)
(179 Points)
Replied 22 May 2010
Dear All
Rule 6 DD b is applicable only to payment made to govt. (Electricity) & not for internet charges, Telephone.
Regards
Jagdish Bhalia
(Practicing CA)
(453 Points)
Replied 22 May 2010
Paymnet of Electricty bill in cash in excess of Rs. 20000/- is technically covered by the provision of Sec. 40A(3) and would prima-facie attract a dis-allowance. However though the existence of the section has been constitutionally held to be valid by the Hon. Supreme Court in the case of Attar Sing Gurmukh Singh Vs. ITO 191 ITR 667, the same was considered along with the Rule 6DD as it existed then which duly provided for the genuine hardship that may be caused to the tax payers. The intention of the provision was to curb the use of black money, reduce tax evasion and inculcate the banking habits. However it was never intended right from the inception of this section, read with the rule and circulars issued explaining the reason for such provision, to restrict the trading activities of the assessee or the tax payer.
Rashid VA
(Articled Assistant)
(44 Points)
Replied 22 May 2010
Hi All
The payment made to electricity board which is more than Rs:20000 in cash can not be disallowded because it is an exemption to sec 40a(3) under Rule 6DD. Remaining payment will be disallowded
Karu Arunachalam
(Student)
(54 Points)
Replied 22 May 2010
Dears,
Payment made in cash exceeding Rs.20000 is disallowed otherwise made in A/c Payee Cheque,DD are allowable as expenditure and 6DD rule. In 6DD rule payment made towards Telephone, EB not included.
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 22 May 2010
cash payment for above specified purposes are disallowed u/s 40A(3) of Income Tax Act, 1961 and Rule 6DD of Income Tax Rules, 1962.......... if payment is being made on a single day and also to a single person............
CA.Pravinchandra
(Executive (F&A))
(2387 Points)
Replied 22 May 2010
I think Rule 6DD not applicable in this Case..
Shiv
(Article assistant)
(48 Points)
Replied 23 May 2010
any anybody tell me that i have recieved the notice u/s 133 6 for sale of prorerty more than 30 lakhs but property in the name of two person me and my brother having share 23 each can i challenge this notice
sagar
(CA Final)
(379 Points)
Replied 23 May 2010
Please refere to Mr. jagdish valia on page one. he has actually got the point. DO agree with him. All are correct. But keeping the judgment of supreme court, which is overriding on Income Tax Act, it can be taken a liberal view.
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