Section 40A(3) IT Act

Page no : 3

Shudhanshu Agrawal (Business) (2570 Points)
Replied 24 May 2010

Originally posted by : Aneesh
	" In such a situation expense will not be disallowed as the bill amount is less than Rs. 20,000 but if bill amount is not confirmed till Computation date in such a case it will be disallowed for the year of computation but if bill amount is less than Rs. 20,000 then they can be claimed in the next year." Mr Sudhanshu, The case here is an advance given to an employee in cash. Rule 6DD is very specific and does not include such a payment so the entire amount is disallowed.

Im sorry. It was a typing mistake from my side. Yes i agree with you they will be disallowed.

varun (Article.CA) (26 Points)
Replied 25 May 2010

I am again referring to my query(i.e. any payment beyond Rs.20000 but for more than 1 bill is allowed or not) which is not yet clear as Mr. Shudhanshu said it is given in the Act the bill must be above Rs.20000....M stating the Act wording below : "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." Now please explain how you interpret that the bill should be more than Rs20000...!! As according to me there is also no judgement on this issue..

Shudhanshu Agrawal (Business) (2570 Points)
Replied 25 May 2010

Originally posted by : varun
	I am again referring to my query(i.e. any payment beyond Rs.20000 but for more than 1 bill is allowed or not) which is not yet clear as Mr. Shudhanshu said it is given in the Act the bill must be above Rs.20000....M stating the Act wording below : "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." Now please explain how you interpret that the bill should be more than Rs20000...!! As according to me there is also no judgement on this issue..

In the above "any expenditure in respect of which payment or aggregate of payments" here any expenditure is considered as any bill as expenditure is always against a bill.

Dixitkumar Dhirajlal Prajapati (Article) (21 Points)
Replied 01 June 2010

Hi!

If Partner has withdrawn the amount more then Rs. 20000 other than account payee cheque then what will be the Tax effect to his Partnership firm.

kantijain (Chartered Accountant in Practice) (385 Points)
Replied 03 June 2010

Dear aneesh,

i don't know whether ur original query is resolved or not and also whether there is unresolved query why don't u frame a fresh question as this is going beyond ur question.