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Sec 40a(3)

jean (article assistant) (113 Points)

13 June 2012

payment of cash more than 20000 as security deposite which is refundable or adjustable in future.

is it contravention of sec 40A(3)

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10 Replies

Roshan A (Chartered Accountant) (458 Points)
Replied 13 June 2012

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 13 June 2012

it is not a expenditure.it is a security deposit.

SEC 40 A(3) APPLIES FOR EXPENDITURE.NOT SECURITY DEPOSIT.

1 Like

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 13 June 2012

it is not a expenditure.it is a security deposit.

SEC 40 A(3) APPLIES FOR EXPENDITURE.NOT SECURITY DEPOSIT.

KARANDEEP,CA,B.Com,CS FNL (JOB) (457 Points)
Replied 13 June 2012

Agreed with CA Parveen Singh ji, that ist applicable on the expenditure and not on receipts, security deposit.

Neeta Kishorbhai Jethmalani (Article assistant) (53 Points)
Replied 13 June 2012

As per section 40A(3) of the Income Tax Act, 1961 " Disallowance of 100 % expenditure exceeding Rs 20,000/- if payment is made by any mode other than account payee cheque or draft ". therefore , the section uses the word expenditure and then only it would be disallowed . So,it does not apply to security deposit..

Dilkhuash Kumar Ray (Audit Assistant) (27 Points)
Replied 14 June 2012

sec 40A(3) is apply only on revenue expenditure not on capital expenditure so disallow,,,,,

Gulshan Kumar (Professional Accountant) (119 Points)
Replied 14 June 2012

C.A SUVAJIT SAHU (CA ( In Practice )) (708 Points)
Replied 14 June 2012

Originally posted by : CA PRAVEEN SINGH
	it is not a expenditure.it is a security deposit. SEC 40 A(3) APPLIES FOR EXPENDITURE.NOT SECURITY DEPOSIT.

Jiral Savla (Senior) (35 Points)
Replied 15 June 2012

SECTION 40A(3) APPLIES TO EXPENDITURE ONLY & NOT TO SECURITY DEPOSIT

CA AMAN KAMALIA (CA) (88 Points)
Replied 17 June 2012

IN THE ABOVE CASE 40A(3) DOES NOT APPLY BUT SEC-269SS GET ATTRACTED BECAUSE SECURITY DEPOSIT TAKE THE NATURE OF ADVANCE AND THEREFORE AS PER SEC-269SS ANY ADVANCE IN EXCESS OF 20,000 MUST BE MADE BY ACCOUNT PAYEE CHEQUE OR DRAFT.