urgebt query sec 40a 3

Hi Rohit..

As per Section 40(A)(3), any amount paid over Rs. 20000/- other than by a/c payee cheques and demand draft...

The only remedy to ur problem is to prove that the tranporter to whom the payment were made were not enjoying banking facilities....for this in section 40A it is been said that no disallowance under this sub-section shall be made where any payment in a sum exceeding twenty thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors.

I hope this solves ur problem...

Harshal Sutaria

 ok thnx buddy..

@ Rohit.

That wont work. See section 40A(4).

 wat does dat say G.K?

ask the transporter to split the bills each less than Rs 20000/- and pay by cash as it is difficult to prove to AO that the transporter does not have bank accounts

As per Sec 40 A(3) the following will be disallowed:

If payment is made by other than A/c Payee CHeque or Bank draft

If more than Rs. 20000 is paid by  during a day to same person against the same bill then it attracts.

Generally,

If the payemnts are made for different bills for same 

 shivram sir  but it is not possible to arrange bills again now..

40A(4) says that a person cannot refuse to take payment by account payee cheque or DD, and tender by account cheque or DD is equal to payment by cash, and this provision applies notwithstanding anything contained in any other law. So the truck drivers cannot say that they are not willing to accept DD/cheque, and that they want cash itself. They are not entitled to make such a demand on you, and you are not required to pay in cash.

So it can't be a valid explanation for paying in cash

The way out would be to make the payment entry on a holiday. But again you might have to produce a receipt.

see section properly. u can prove by telling that banking facility is not available with the party so u will be allowed this section

Yes i am agreeing with you, but there is a difference between not having a bank account and not having banking facilities.

Go through Rule 6DD(j), which provides that payment required to be made on a day on which the banks were closed.

 split the bills if possible below 20000

for this provision 2 tk effect both expenditue and pmt shud exceed 20k

 pmt under 6dd will be very hard to prove. burden of proof will be on assessee. it wud be very difficult to prove that pmt was made in a place where there is no banking facilites or pmt is made on bank holidays