40A(2) will precedes over 40A(2) and only after it that 40A(3) 'll be levied in ur query 30000-11000=19000 will be alloed as deduction and 11000 will be fully disallowed
CA Nishant Chakrawarti
(Audit MAnager)
(77 Points)
Replied 18 November 2009
40A(2) will precedes over 40A(2) and only after it that 40A(3) 'll be levied in ur query 30000-11000=19000 will be alloed as deduction and 11000 will be fully disallowed
CA Abhiram Bharat.
(Assistant Manager Taxation)
(508 Points)
Replied 19 November 2009
sec40A(2)n will be applied first..
compare rs. 19000 wd Rs.30000/-. which concludes that 11000/- will be disallowed on a/c of amount in excess of fair market value..
& tehreafter sec 40A(3) will be seen... as per this section nothing shall be disallowed as the amount i.e. Rs. 19000/- i. e. (Rs,20000-Rs 11000) does in no sense exceeds Rs.20000/- which the minimum requisite value per bill in a single day payment for the applicability of sec 40A(3).
m.balavenkatesh
(article assistant)
(31 Points)
Replied 24 November 2009
40A(2) IS APPLIED ONLY BY AN ASSESSING OFFICER .SO,ACCORDING 2 40A(3) TOTAL 30000 IS DISALLOWED
machender
(student)
(190 Points)
Replied 24 November 2009
Dear Sir,
Section 40 A(3) will be applicable to those expenses which are debited to Profit and Loss Account. debiting profit and Loss account in the sense expenses allowed under the income tax act. when expenditure disallowed u/s 40 A (2) Rs.11,000/- the expenditure allowed in computation will be Rs.19,000/- so Section 40 A (3) will not be applicable in this case.
in my opinion Section 40 A(2) has to be applied first and section 40 A(3) next
Ansari
(ca final)
(444 Points)
Replied 24 November 2009
Sec 40A(2) shall apply first, go throught the Singhania's book Problem 165-P4 at Page No. 431
Harshal
(Article Assistant )
(182 Points)
Replied 24 November 2009
I presum that there is no priority given to sections...
To be very specific Section 40(A)(2) is generally applied by AO and so here full amount of Rs. 30000 vl b disallowd under section 40(A)(3)...
VISWESWARA RAO
(Advocate)
(278 Points)
Replied 05 December 2009
In my opinion there is no specific provision under the Income Tax for application of sections. Generally the department will apply the section which is benefical to it.
Hareesh H Sharma
(Cleared IPCC..now article)
(894 Points)
Replied 05 December 2009
Hey whats the order of this sections stuff...so can i ask a doubt...what abt a petrol exp of a car used for 50% personal and 50% biz purpose which runs to say 30,000 rs in one bill paid in cash(i know its a absurd amt).. So will half of it be disallowed u/s 37 first and rest 15000 will be allowed??as its under 40 (A)(3) limits?
CA Balram Sharma
(CA)
(839 Points)
Replied 09 December 2009
Originally posted by :Hareesh H Sharma | ||
" | Hey whats the order of this sections stuff...so can i ask a doubt...what abt a petrol exp of a car used for 50% personal and 50% biz purpose which runs to say 30,000 rs in one bill paid in cash(i know its a absurd amt).. So will half of it be disallowed u/s 37 first and rest 15000 will be allowed??as its under 40 (A)(3) limits? | " |
Yaa this querry is also in the nature of my querry,
if expeses is disallowed becase of personal nature,
then on the balace amount other provision will be applicable, hence section 40(3) will not applicable in this case also.
Hareesh H Sharma
(Cleared IPCC..now article)
(894 Points)
Replied 09 December 2009
yea sir that was what even i was asking..i don think the sections are applicable in there order...lik 40 A 2 comes first and then 40 A 3...because if so one section would defeat the purpose of other section if that it is the case
Yeshwanth
(Chartered Accountant)
(145 Points)
Replied 25 December 2009
First 40(A)(2) will be applied and the amount disallowed u/s 40(A)(2) will be reduced from the whole amount and the resulting amount will apply to 40 (A)(3)
pratik jain
(practicing chartered accountant)
(828 Points)
Replied 26 December 2009
sir,
excessive payment of (30000-19000)=11000 will b disallowed under sec 40(A)2 first.
then remaining 19000 will be fully allowed as its under rs 20000 and 40(A)3 will not apply.
THIS is D correct answer.
CA Jyoti
(student)
(114 Points)
Replied 26 December 2009
from my point of view whole 30000 disallowed....
VIPUL
(ARTICLE ASSITANT)
(68 Points)
Replied 26 December 2009
first of all 40 A(2) will apply then whatever amount left after the applicability of 40A(2) then after 40A(3) will apply in the current case as the fair market value is 19000/- so 11000/- will be disallow under section 40A(2) and balance left is Rs 19000/- which is less then 20000/- so proviso of section 40A(3) will not apply
Shashi Bhushan
(Learner, Jalandhar)
(996 Points)
Replied 05 January 2010
40 A(2) is optional for AO. but 40 A(3) is mandatory for AO. if 40 A(2) is applied by the AO then remaining expenses can not be disallowd as it will be less than 20000. but if AO apply 40 A(3) then whole 30000 will be disallowed. AO can select any option.
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India