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Disallowed u/s 40a(3)

CA Mohit Agrawal (Chartered Accountant) (371 Points)

10 May 2013

I case a kacha adhatiya receives payment through cheque in his bank account on behalf of the principle and makes payment to him in cash than will it be disallowed in the hands of kacha adhatiya or buyer?

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4 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 10 May 2013

Hi Mohit,

Any payments made in cash exceeding the threshold limit shall attract disallowance u/s 40(A)(3) of the Income Tax Act, 1961, unless such payment is exempt under rule 6DD of the Income Tax Rules, 1962.

Therefore in the above case, Section 40(A)(3) shall be attracted to the payment made by Kacha adhatiya.

Regards,

Devendra Kulkarni

CA Mohit Agrawal (Chartered Accountant) (371 Points)
Replied 13 May 2013

Hi Devendra, But the amount of payment made is not claimed as expense by adhatiya, still will it be disallowed?

Devendra (Chartered Accountant) (4775 Points)
Replied 13 May 2013

Then there is no need to disallow the expense.

Regards,

Devendra Kulkarni

Manoj KumarParida (Accountant) (21 Points)
Replied 25 September 2014

Dear Sir,

I have studied Singhania Books that if Fixed Asset Purchased in cash above Rs.20,000 then depreciation will be disallowed.But now came to Know that cannot be Disallow U/S 40A(3)

Which is correct pls give me some confirmation

With Regards

Manoj Kumar Parida