Section 40A(3)

Section 40A(3) / 40A(2) Non Deduction of Cash Expenses / payments to Relatives

Income Tax - Section 40A(3) was introduced by the Finance Act 1968 as a provision designed to counter evasion of tax through claims for expenditure shown to have been incurred in cash with a view to frustrating proper investigation by the Department as to the identity of the payee and the reasonableness of the payment....

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Expenses Disallowed under section 40A(3) and Section 40A(3A)

Income Tax - Section 40A(3) and Section 40A(3A) deals with Disallowance of 100% of expenditure if payment is made by any mode other than account-payee cheque or draft  in the year of expense or in the subsequent year / Years. Article explains provision of Section 40A(3) and Section 40A(3A) of Income Tax Act, 1961. Section 40A(3) of Income Tax [&hell...

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All About Disallowance under Section 40(A)(3)

Income Tax - Treatment of expenditures incurred by an assessee in excess of Rs. 20000/- (wef A.Y. 2018-19 Rs 10000/-) in cash or bearer cheque under section 40(A)(3) of the Income Tax Act, 1961...

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All you need to know about various provisions in relation to Cash transactions under Income tax Act

Income Tax - The Government of India with an intention to evade black money and to discourage the cash transactions time and again taking various steps. Specially the Income tax Act is amended and provided with disallowances and stringent penal provisions for various types of cash transactions. Let us briefly understand some of such provisions here....

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Contradiction in Intention and Implementation: Amendments in section 11 of income tax act, 1961

Income Tax - This article brings out the contradiction over the intention and implementation of amendment in section 11 so as to bring the disallowances u/s 40A(3) and section 40(a)(ia) in computation of income of the Trusts or other institutions claiming exemption u/s 11...

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SIT report: Restrict Cash Transaction/Holding to curb black money

Income Tax - It is suggested that there should be a positive provision under the I.T. Act that any transaction involving more than Rs.3,00,000/– (Rupees Three Lacs) shall be invalid & illegal and would be a punishable offence, if amount is not paid by account payee cheque or account payee bank draft or use of electronic clearing system through a ban...

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ITAT deletes addition under section 40A(3) for Cash payments to BSNL

Kamta Prasad Mittal Vs Dy. CIT (ITAT Lucknow) - Kamta Prasad Mittal Vs Dy. CIT (ITAT Lucknow) It is an undisputed fact that a Demand Note was issued by BSNL requiring the assessee to make payments in cash and genuinity of the payments to BSNL was never doubted by the With regard to the observation of the ld. CIT(A) that BSNL is not a […]...

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No disallowance for cash payments if transaction is genuine & identity of payee is known

M/s A Daga Royal Arts Vs ITO (ITAT Jaipur) - In the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the action of ld. AO in disallowing the claim o f expenditure of Rs. 1,71,67,000/- by applying section 40A(3) of Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary...

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Section 40A(3) provisions not intended to restrict business activities

Sabita Panda Vs ITO ( ITAT Cuttack) - The provisions of section 40A(3) are not intended to restrict the business activities but to caution that payments exceeding Rs.20,000/- are made in cheque/draft. The provisions of section 40A(3) of the Act are to be in consonance with business expediency trade practice and other genuine relevant fa...

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Cash Payments not claimed as expenditure cannot be disallowed U/s. 40A(3)

ACIT Vs Jasmine Buildtech (P) Ltd. (ITAT Delhi) - Question of disallowance under section 40A(3) would not arise, where assessee had not claimed the payments as expenditure, while computing its business income. ...

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Section 40A(3) overrides section 145(3) read with section 144

Iqbal Ahmed Khalil Ahmed Subedar Vs ITO (ITAT Mumbai) - These two appeals, filed by the assessee, being ITA No. 2135/Mum/2013 & I.T.A. No. 4896/Mum/2015 for assessment year 2009- 10 and 2008-09 respectively are directed against two separate appellate orders dated 22.01.2013 and 25-02-2015 respectively passed by learned Commissioner of Income Tax (Appeals...

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Recent Posts in "Section 40A(3)"

ITAT deletes addition under section 40A(3) for Cash payments to BSNL

Kamta Prasad Mittal Vs Dy. CIT (ITAT Lucknow)

Kamta Prasad Mittal Vs Dy. CIT (ITAT Lucknow) It is an undisputed fact that a Demand Note was issued by BSNL requiring the assessee to make payments in cash and genuinity of the payments to BSNL was never doubted by the With regard to the observation of the ld. CIT(A) that BSNL is not a […]...

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Section 40A(3) / 40A(2) Non Deduction of Cash Expenses / payments to Relatives

Section 40A(3) was introduced by the Finance Act 1968 as a provision designed to counter evasion of tax through claims for expenditure shown to have been incurred in cash with a view to frustrating proper investigation by the Department as to the identity of the payee and the reasonableness of the payment....

Read More
Posted Under: Income Tax |

Expenses Disallowed under section 40A(3) and Section 40A(3A)

Section 40A(3) and Section 40A(3A) deals with Disallowance of 100% of expenditure if payment is made by any mode other than account-payee cheque or draft  in the year of expense or in the subsequent year / Years. Article explains provision of Section 40A(3) and Section 40A(3A) of Income Tax Act, 1961. Section 40A(3) of Income Tax [&hell...

Read More
Posted Under: Income Tax |

All About Disallowance under Section 40(A)(3)

Treatment of expenditures incurred by an assessee in excess of Rs. 20000/- (wef A.Y. 2018-19 Rs 10000/-) in cash or bearer cheque under section 40(A)(3) of the Income Tax Act, 1961...

Read More
Posted Under: Income Tax | ,

No disallowance for cash payments if transaction is genuine & identity of payee is known

M/s A Daga Royal Arts Vs ITO (ITAT Jaipur)

In the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the action of ld. AO in disallowing the claim o f expenditure of Rs. 1,71,67,000/- by applying section 40A(3) of Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Reli...

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Section 40A(3) provisions not intended to restrict business activities

Sabita Panda Vs ITO ( ITAT Cuttack)

The provisions of section 40A(3) are not intended to restrict the business activities but to caution that payments exceeding Rs.20,000/- are made in cheque/draft. The provisions of section 40A(3) of the Act are to be in consonance with business expediency trade practice and other genuine relevant factors...

Read More

Cash Payments not claimed as expenditure cannot be disallowed U/s. 40A(3)

ACIT Vs Jasmine Buildtech (P) Ltd. (ITAT Delhi)

Question of disallowance under section 40A(3) would not arise, where assessee had not claimed the payments as expenditure, while computing its business income. ...

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Section 40A(3) overrides section 145(3) read with section 144

Iqbal Ahmed Khalil Ahmed Subedar Vs ITO (ITAT Mumbai)

These two appeals, filed by the assessee, being ITA No. 2135/Mum/2013 & I.T.A. No. 4896/Mum/2015 for assessment year 2009- 10 and 2008-09 respectively are directed against two separate appellate orders dated 22.01.2013 and 25-02-2015 respectively passed by learned Commissioner of Income Tax (Appeals)-33...

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No disalllowance U/s. 40A(3) for cash Payment of electricity bills of JVVNL

Sumit Industries Vs. ITO (ITAT Jodhpur)

Payment of electricity bills to JVVNL is held to be the payment made to the government for the purpose of section 40A(3) of the Income-tax Act and therefore said section 40A(3) cannot be invoked and no addition is called for and additions so made and confirmed by the ld. CIT(A) is directed to be deleted....

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After rejection of books of accounts AO cannot make Addition U/s. 40A (3) & 68

Deepak Mittal Vs. ACIT (ITAT Delhi)

The facts of the case are that the assessee filed return of income declaring income at Rs.22,52,471/-. The assessee is an individual and engaged in the business of trading/ Distribution of ITC Products under the name and style of M/s. DK Enterprises. On verification of the P & L A/c, audited report and books of account of the assessee, it...

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