Sec 40A(3)

As per Section 40A(3), Where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure.

Hence as per the above provision only the ultimate payment to the party need to be considered. Since the payment has been made by way of a Demand Draft, the same will not be disallowed as expenditure.

Also the purpose of Section 40A(3) is that there should not be any huge cash payment which will escape the tax liability.  .

Hence in your case, the cash paid to take the DD is a valid expenditure nd hence will not get disallowed

Regards

M R M

it will not get disallowed u/s 40a(3) bcoz u have paid the same by DD and debited into p & l a/c. it will only disallowed if the following circumstances will occured:

not diasallowed

it shall not be disallowed u/s 40A(3)

it shall not be disallowed u/s 40A(3)

Ya,

The ultimate payment to thirdparty will be co\nsidered hence in this case it will not be disallowed u/s 40A(3).

allowed........

No not at all. It will not be disallowed...

it is allowed as expenses......