Section 40A(3)before amendment said that "Any payment exceeding Rs 20000 and made in cash on a single invoice on a single day will be disallowed for deductions"
However, with effect from april 1, 2009 the word "Aggregate" has been added to avoid splitting of cash payments.
My question is that if an assessee made cash payments exceeding Rs. 20000 on a single day to a contractor (in the year 2004-05)but receipts were taken by the assessee on split amounts...then will the exenditure be disallowed???
Wat contention shoud the assessee give to avoid this disallowance?
Can anyone provide me with some case laws on this issue
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Splitting of cash payment disallowed?
Replies (4)
Nupur
cann u confirm me whether u r talking abou finacial year 2004-2005 or some what elseeeeeee........
Its financial year 2004-05
Nupur
I you talking about 2004-05 , then it will not be dis allowed , As from Ast, year 2009-10 , payment made to person more than 20000 by cash in a day then whole amount is disallowed. But for F.Y. 2004-2005 , the limit is based on "EXPENDITURE" not on PAYMENT so if you make payment to contractor via diffrenet bill then you are totallly under law .
As far as concerned by case law , i dont know exactly the case law but on plain reading of law & its clarification you are done ur job as per law & order........
Hope now you are clear.............
Payment exceeding Rs 20000/- in a single day to same person but for different bills is allowed. Refer case Shri Ram v/s CIT
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