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Dis- allowance expenditure

Tax queries 258 views 5 replies

Respected professionals please clarify my doubt regards disallowance expenses under section 40(A) 3 

During my audit verification i had found that one expenditure made my business towards JCB works

Invoice issued by Sri Earth Movers on 15.07.2021 of r.s 14000. payment was made by the business entity on 16.07.2021. These payments were settled on two times on same day 9000& 6000 respectively ( Received by Different persons on same bill)  whether it should be allowable expenditure or not.

And also clarify that Disallowance should be calculated on invoice basis or person basis 

Replies (5)
No the expenditure will be disallowed as payment exceeds 10000 rupees in cash as under section 40A(3) tells that payment should be made upto 10000 rupees in cash in a single day in a transaction. But in this case payment is 15000 rupees in cash so it will be disallowed

Were both the payments received by such "different persons" on behalf of Shri Earth Movers? Or are they made to a third party altogether on behalf of Shri Earth Movers?

payments are received by the different persons on behalf of the sri earth movers on single bill

In that case, entire amount would be disallowed.

Then it will be disallowed


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