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A company assessee engaged in construction business paid Rs 25,000 to a contractor in cash. The payment was debited to Soil Testing charges under WIP. It is not being charged to PL, ie, deduction is not being claimed under Business Profits.
It will be reflected in Balance Sheet under Current Assets.
Will section 40A(3) be attaracted in this situation.
Regards,
Section 40A(3) is applicable to the PAYMENT, so here payment is made so applicable.
but,
after appling its not allowed as deduction in B&P and here you are not claiming as deduction also, so not applicable.
As you are not claiming it as deduction, therefore there is no question of disallowance.
Jawahar and Associates Chartered Accountants
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