Sec 40a(3) of it act

Answer: Dear Sir ,

Please read out the mentioned provision of section 40A(3) of the Income tax act it will clearly tell the whole section

1. If an assessee makes payments at different times during the day and he has no idea that he has to pay to the same person on more than one occasion, he cannot be subjected to the statutory provision of section 40A(3), unless any one payment exceeds Rs. 20,000.

2. If an assessee makes payment of two different bills (none of them exceeds Rs. 20,000) at the same time in cash or by bearer cheque, section 40A(3) is not applicable even if the aggregate payment is more than Rs. 20,000. This is because of the fact that section 40A(3) is applicable only in respect of an “expenditure” which is excess of Rs. 20,000. In other words unless the amount of the bill and the amount payment exceed Rs. 20,000, section 40A(3) is not applicable.

3. Where the assessee made payment over Rs. 20,000 at a time, partly by crossed cheque and partly in cash to some parties but the payment in cash alone at one time did not exceed Rs. 20,000, section 40A(3) is not attracted.

4. Provision of section 40A(3) does not apply in respect of an expenditure which is not to be claimed as deduction under sections 30 to 37. For instance, if an assessee gives donation in cash, section 40A(3) is not applicable, since donation is not deductible under sections 30 to 37.

5. Section 40A(3) is not applicable if an assessee purchases a capital asset.