Thanks
Amit Kumar Verma
Thanks
Amit Kumar Verma
yes in both the case the expense will be dissallowed..the aggregate of expense is taken into account for 40A(3) purpose
Case 1:
Nothing shall be disallowed, since section 40A(3) states that "Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure"..
In nutshell, the expenditure as well as payment of that particular expenditure must exceed Rs. 20,000.
Case II:
If the separate invoices were made for Material X & Y, then no dissallowance, otherwise it shall be disallowed
| Originally posted by : Sumit Grover | ||
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Case 1: Nothing shall be disallowed, since section 40A(3) states that "Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure".. In nutshell, the expenditure as well as payment of that particular expenditure must exceed Rs. 20,000. Case II: If the separate invoices were made for Material X & Y, then no dissallowance, otherwise it shall be disallowed |
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i am sorry but i have a different viewpoint altogether..
this aggregate word has been inserted to avoid tax evasion..
if cash payment in excess of rs. 20000 is allowed by splitting of bills,everyone will resort to that,thus evading tax..this is my personal viewpoint..
lets see what take others have on this .
U/s 40A(3), expenditure is not relevant whether two bills are below Rs.20000/- BUT Payment is important whether it is made in 1 day exceeding Rs.20000/- or not.
So, in these 2 cases expenditures are disallowed as payment exceeds Rs.20000/- though it is paid for different bills.
| Originally posted by : CA Raj Patel | ||
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U/s 40A(3), expenditure is not relevant whether two bills are below Rs.20000/- BUT Payment is important whether it is made in 1 day exceeding Rs.20000/- or not. So, in these 2 cases expenditures are disallowed as payment exceeds Rs.20000/- though it is paid for different bills. |
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Agree...
In both case expenses is disallowed
"Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure".
As per this it emphasis on TO A PERSON IN A DAY hence in both cases it is disallowed....
| Originally posted by : Sumit Grover | ||
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Case 1: Nothing shall be disallowed, since section 40A(3) states that "Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure".. In nutshell, the expenditure as well as payment of that particular expenditure must exceed Rs. 20,000. Case II: If the separate invoices were made for Material X & Y, then no dissallowance, otherwise it shall be disallowed |
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Totally agree with Sumit... sec 40A(30) is not attracted...since expenditure as well as payment should exceed rs. 20000!
as per me both will be disallowed
Dear All
Please read section 40A(3) carefully:
"Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees"
It clearly states that in respect of an expenditure, the payment or aggregate of payments must exceed Rs. 20,000
In the case first. the various expenditures are below Rs. 20,000 though the collective payment of all the different expenditures(i.e. various invoices) exceeds Rs. 20,000.
Hence nothing shall be disallowed in case 1.
Suppose, the two invoices were issued to the same party on same day- one Rs. 25,000 and other Rs. 15000.
And the very next day the payment of Rs. 40,000 is made to the vendor.
Then Only Rs. 25,000 shall be disallowed, because in respect of the second expenditure(i.e. invoice), only Rs. 15,000 was paid.
This is my view:
The theme of the section is to cover the cases where payments made to 1 person in a day are in excess of Rs.20k. These payments may be towards any expenditure (as stated in the section).
Hence, the section doesnt focus on the different nature of expenses but it focuses on the mode of making payment in resepct of such expenses.
Therefore, in my view, in both the given cases, expenses should be disallowed the mode of payment being cash and it exceed Rs.20k.
It is written--
Expenditure in respect of which payment is made
rather than the payment may be made to any expenditure(as written by you above)
Section 40A (3)
(3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.
In the section, it uses 'any expenditure'. Had this been 'an expenditure', then i would say that the section focuses on the expenditure as well as the payments against that particular exp.
But since it uses 'any expenditure', according to me against which expenditure is not important but only the mode of payment is important (and ofcourse given the other conditions i.e. to 1 person in a day and more than Rs.20k)
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