a truck owner has attached his truck to a transport firm (partnership transport firm) from where truck owner loads goods for multiple delivery places and suppose 4 freight challans are made for amount Rs. 9,000 each (total freight amount is 36,000) .....
transport firm charge 10% commission on freight amount which is 3,600 and rest of the amount Rs. 32,400 is payable to the truck owner.
in this situation ...can a transport firm paid rs 32,400 to the truck owner in cash ?
1. According to sec 40A(3), deduction will not be available if the payment made to a person in a day in cash exceeds Rs .10,000. However, the above amount of Rs. 10,000 will be substituted by Rs. 35,000 in case of payments made to plying, hiring or leasing goods carriage.
2. In the given case carrying goods by truck will be covered under the above provision and the threshold limit applicable in the case for the purpose of sec 40A(3) will be Rs. 35,000. Hence the transport firm can pay Rs. 32,400 in cash and no disallowance will be attracted in the given case.
Please correct me if the above solution has an alternative view.
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