Ok Tarun i agree...then please explain to me the relevance of the term aggregate of payments made to one party .because earlier the section contained the wording one single bill i guess.Then why are those wordings for...And are u so sure such cases are allowed in practical cases by the AO...

i m talking abt Ay 09-10

Dear all,

if any assessee pays amount in excess of Rs.20,000/- to any person otherwise than by an account payee cheque or account payee demand draft (subject to Rule 6DD) "the expenditure related to such payment shall be disallowed".

it is not that individual bills. but the expenditure related to such a payment will be disallowed.

in my opinion the entire expenditure has to be disallowed.

for furhter clarifiacation you can refer T.N.MANOHARAN Book on Direct Taxes and Taxation.

 Yup machender...I guess its the payment to the party which is important...not the bills for expences...Anyway am waiting for an expert opinion....

And Arpit if the example is specifically given i agree its my mistake of interpretation of the act...But wud you be kind enough to site that example in as far as same wirds as poss..i am bit  busy nw but i can surely refer to it tonight..thanx in advance Arpit

 Thanx a lot guys for the discussion..Right or wrong nice to be informed about a lot of new things...

I agree with tarun sharma that for disallowance u/s 40 (A) 3 payment should exceed Rs 20000/- on single day paid to same party for AN EXPENDITURE

H Sharma, do u have any specific reason why u r interpriting like that.

if the bills are the basis for interpritation of Section 40A(3) there is no significance for Rs.20,000/-, here. i would be pleased to see any specific reason which supports your assertion

H Sharma, do u have any specific reason why u r interpriting like that.

if the bills are the basis for interpritation of Section 40A(3) there is no significance for Rs.20,000/-, here. i would be pleased to see any specific reason which supports your assertion

dear ca student,

from A.Y. 2009-10 if an assessee make any payment above Rs 20000 to a person otherwise then an a/c payee cheque or a/c payee dimand draft., then it will be disallowed u/s 40(A)(3).. ir respective of the no. of bills. Though the bills was under Rs 20000 but the aggregate payment was above 20000 to a one person. so it will disallowed u/s 40A (3).

if the aggregate payment (otherwise than by an account payee cheque/draft) to the same person(bill) dueing a day exceeds Rs. 20000, provisions of section 40A(3) will apply and the entire amount of such payment will be disallowed.

Section 40A(3) shall be attracted if the following conditions are fulfilled:

- Assessee incurs any expenditure

- in respect of which payment or aggregate of payments(i.e. even more than 1 payment ) made

- to a person

- in a single day

- of a sum exceeding Rs. 20,000/-

- otherwise than by account payee cheque or demend draft.

Thus it is clear that number of bills is irrelevant. What is to considered is payment to a single person in one day. Thus if payment exceeds Rs.20000 in a single day to the same person(even more than 2 bills) , it shall be disallowed.

right anubhav,

the no. of bills are irrelevant.as, if v consider d no of bills and allow dis expenditure den importance of introducing dis section will get lost.people will still incurre cash exp in one day which are more than 20000.

I think d law makers can't make such a big mistake.

right anubhav,

the no. of bills are irrelevant.as, if v consider d no of bills and allow dis expenditure den importance of introducing dis section will get lost.people will still incurre cash exp in one day which are more than 20000.

I think d law makers can't make such a big mistake.

Section 13 of the General Clauses Act, 1897 presumes that in any Central statute unless there is anything to the contrary, the words importing to the masculine gender shall include the feminine and the singular shall include the plural.

A decision was taken in 309 ITR 329 [Karnataka], (2009) in case of Ananda Basappa -  where this was applied, and assessee was held eligible to build TWO flats to claim the benefit of section 54.

This will work in reverse as well against the assessee in cases like 40A(3), undoubtedly. "Any Expenditure" can be interpreted as Expenditures.