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Section 40a(3) of the income tax act.

Anoop kumar (Article) (570 Points)

02 April 2012

Dear friends
I have a query related to section 40A(3) of The Income Tax Act.
A person working as a property dealer, when he purchases the land then some payment made in cash which may be in lakhs. As per section amount paid in cash is disallow.
Now I want to know that whether this type of Assessee have some relaxation or not???

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4 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 02 April 2012

Relaxation can be given subject to teh rules mentioned in rule 6DD of teh I-T Rules.

Radha Lohia (CA,CS,M.Com) (56 Points)
Replied 03 April 2012

Dear Anoop Kumar,
There are no such exceptions for property dealer under exception of Rule 6DD of I.T.Act 1961.

Sonam Bidasaria (CA) (770 Points)
Replied 03 April 2012

To make dis-allowance u/s 40A(3), first that expense should have been debited to the Profit & Loss Account. Since, the assessee deals in property, so it is like any other good which is traded in the normal course of business.

And hence, it willbe dis-allowed as it does not fall within the exception provided in Rule 6DD.