Section 40A (3)

CA Hemang Shah (PRACTICE) (658 Points)

13 June 2011  

this section is apply only if an expenditure incurred above20000. It means if we purchase goods worth7000 in a day 3 times and we pay cash 21000 then it is fully allowed. But if we purchase goods 3 times in a day worth15000, 18000 and 27000 then if we pay said amount70000 in a day then only 27000is disallowed bcoz section 40 A (3) apply only if an expenditure over and above20000. This is my view. Plz comment this if i m incorrect. Or send me msg on 919601392989 if u like that.