Sec 40A(3)

Preksha,

Read the scope of cetion 40A(3).you will find the point which i m stressing on.

Aggregate of payments means sum of all the payments to a single person against a single bill or an expenditure.

Hareesh,

If you are talking about the wordings and the interpretation of the section then i m correct.But practically you are correct because no ITO is going to allow the expenditure as the payment exceeds Rs. 20,000.It is better to make payment on different dates.

 Fatema

          Its the aggregate of payments thats imp here i don think its said its for any single exp.You have the scope of asking your sir for clarifications which i don have as of now...So u bttr clarify it with any experts..But i don  think it will be allowed by ITO...

And abt any such exp aspect..its said no ded will be allowed for such exp if its or aggregate of payments exceed 20000 to a party....its nt said the expenditure should alone account for 20000..So if any expences cumulatively account for more than 20000(being paid to one single party) no deduction will be given for each such exp.. It can be interpreted that way also

 And as u said Fatema the scope of the sections is disallowance of expences or payments...so its not a favourable one for the assessee...

The entire expenditure is disallowed since from the A.Y.2009-10 the aggregate of payments made to a person in a day is to be taken into consideration irrespective of the nature of expenditure.

Please check the exceptions such as the date of payment made, it plays a vital role as the expenditure can be allowed even if exceeds Rs.20000 in aggregate if it is a bank holiday etc.,

there will be no disallowance since there are 2 separate bills against which payment are made..

hence, Fatima's and Tarun's answer are right....

I guess that does it...I hope the wordings of the act confused either me or you Fatema...

And Dhananjaya is right too...Rule 6 DD can be checked too

 But Ravi again check the earlier posts...it says aggregate of payments made to a person...there it doesnt specify its for a single expenditure...Even am waiting for a real expert opinion here

fatema is right u can check it from PCC/Final  girish ahuja income tax book,example is given after explation of section 40(A) (3)

 Ok Arpit ..if so agreed...But are u sure its a Ay 09 10 or 10 11 book???asking you because it was a recent amendment in that section as GK pointed out earlier

According to section 40A(3), where the

assessee incurs any expenditure in respect of which payment is made in a sum exceeding

Rs.20,000 otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft.

so, The Expenses will be Allowed.

Ayush Agrawal

ayushagrawal @ rediffmail.com

 Nop ayush i have copied the section..U missed out one relevant part of our debate...it also says aggregate of payments to one party in a day shoud nt exceed 20000

hello hareesh if u r still confused or in doubt  please refer ready reckoner sec 40A(3)