Cash purchases

It is a raw material for you. I dont think cash purchase above Rs 20000 is allowable in this case.

Nothing as of sorts is mentioned in Rule 6DD, hence, not allowable.

1. if ur business is related to this then I am fully agree with Mr. pratik that it is not allowable to u ...

2. whether u go for agricultural purpose then there are certain conditions that u have made ur purchase from such farmers or dealers of reral areas that they cannot open a bank account then in that case it is allowable to u ...

Choice is all yours ....

Regards,

Ankit

In your case Mr. Manik cash payments will be disallowed if amount is exceeding Rs.20000/-. 

Kindly refer the below information

As per Rule 6DD :-

f)  where the payment is made for the purchase of—

   (i)   agricultural or forest produce ; or

  (ii)   the produce of animal husbandry (including hides and skins) or dairy or poultry farming ; or

(iii)   fish or fish products ; or

(iv)   the products of horticulture or apiculture,

to the cultivator, grower or producer of such articles, produce or products;

Reading the above it is very clear that contention of CBDT is to give such an allowance to those entrepreneurs who are in a 100 % agriculture or related activities.

But ur concern is making oil from rice barn which will be counted as a manufacturing business.

If your entity is not covered under the definition of manufacturer given by CBEC then you can claim it to be an agricultural activity

But still my opinion would go for disallowing the same.

Kindly Wait for Expert's Comments.

No offence to other replies

Originally posted by : Prateek Agarwal
	It is a raw material for you. I dont think cash purchase above Rs 20000 is allowable in this case. Nothing as of sorts is mentioned in Rule 6DD, hence, not allowable.

agreed

in short , it will e disallowed

Dear Manik,

If you purchase from market (if the seller is not Grower of rice bran), then disallowed.

If you purchase from Grower it will not be disallowed.

I started purchasing land plots by A/C PAYEE instrument payment. Stamps  & registration each is above 20000/- & accepted only in cash. For its improvement, I shall get its boundry wall constructed for its after sale as a part of my regular business. But labour, contrator, material supplier all accept only cash even if more than 20,000/- Whether will it be allowed by IT Dept. If no what is the way out ?

Mr. A.K. Agrawal, your situation seems to be very complicated as you are bound to pay such expenditure in cash.

Please consider the below given Decision

ITO should adopt practical and not a technical approach - The ITO should take a practical approach to problems and strike a balance between the direction of law and hardship to the assessee. He should not enmesh himself in technicalities. After all, the object is not to deprive the assessee of the deduction which he is otherwise entitled to claim - Girdharilal Goenka v. CIT (supra).

The contention of the department behind section 40A(3) is to avoid usage of black money and not to hinder the growth of business.

In your case your problem is very genuine and thats why i think that expenditures shall be allowed.

In my opinion I have two way outs :-

1. Stop purchasing from them (practically not possible).

2. Take a written representation from them that they will accept payment only in cash along with the reasons for the same.( you know how to do it)

Hi

Hope you can do cash purchase with URD(unregister dealer) on issuing cheque in the name of supplier with out account pay.

Hi all,

i want to ask whether its applicable to Medical field also.

When major operations or emergency operations are done, hospital take cash in advance as a deposit.

Goverment allows and how its been under goverment acts.

Regards,

Dipesh Dedhia

The same response for you also Mr. Deepesh which I have given to Mr. A. K. Agrawal,

genuine expenditure can not be disallowed mere due to the reason of a technical language of law.

I am a bussiness man. I have purchase a land Rs. 125000 in Cash & Registry in Registrar Office. i am treat this land stock in trade in Balnace Sheet. Can this entry will be disallowable U/s 40 of Excess cah payment above Rs. 20000. plz explain them