Sec. 40A(3)

not above 20000

full amount of any payment above 20000 is disallowed

Mr. Tanay

What Mr.Trinath said is correct.

The amended section 40A(3) e.e.f. 1-4-2009 is as under:

"Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque  drawn on a bank or account payee bank draft, exceeds twenty thousan rupees, no deduction shall be allowed in respect of such expenditure."

Mr. Tanay, now you have come to know the implications of the provisions of section 40A(3).

With Best Wishes

Sathikonda

full amount is disallowed

Right Full amount will not be claimed deduction.

full amount of expense would be disallowed

Full amount will be disallowed.

Full amount will be disallowed.

Full amount will be disallowed.

if the cash payment exceeds Rs.20,000 (for the conditions mentioned under the sections and considering the exceptions under Rule 6DD) the whole amount will be disallowed and not merely in excess of Rs.20000/-

Hallo colleagues..

Cant we challenge this provision as unconstitutional as it put restriction in freedom of carrying business

Mr.Halim Siddiqui

In the case of Attar Singh Gurumukh Singh V. CIT [1991] 191 ITR 667 the court opined that disallownace of expenditure u/s 40A(3) does not amount to restriction on the fundamental right to carry on business.

Best Wishes

Sathikonda

This is not a restriction on freedom to do business. You can pay in cash whatever amount you wish to pay, but the only thing is that you have to pay tax on that amount through of disallowability of expenses.

Hie,

This provision can't be proved unconstitutonal because this provision restrict the mode of payment in cash so that govt can trace the payment to whom it is made. This provisoin is there just for controlling purpose nothing more or less than that. Moreover this provision is not prohibited to make payment for less than 20,000.