Section 40A(3)

S. 40(A)(3) Need to review proposed reduction in threshold limit from Rs. 20000 to 10000

Income Tax - Looking to the hard realities, practical problems of traders in respect of payments for the purchases for business, there was need to increase threshold limit of Rs. 20000/- instead it is proposed to be Rs. 10000/- w.e.f. from 1.4.2017(effective date i.e. from the start of the FY 2017-18)....

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Section 40A(3) Limit to pay cash expenses to be reduced to Rs.10000

Income Tax - Budget 2017 proposes ro reduce existing threshold of cash payment to a person from twenty thousand rupees to ten thousand rupees in a single day; i.e any payment in cash above ten thousand rupees to a person in a day, shall not be allowed as deduction in computation of Income from Profits and gains of business or profession...

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Disallowance of depreciation and capital expenditure on cash payment

Income Tax - Under the existing provisions of the Act, revenue expenditure incurred in cash exceeding certain monetary threshold is not allowable as per sub-section (3) of section 40A of the Act except in specified circumstances as referred to in Rule 6DD of the Income-tax Rules, 1962....

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100% expense disallowance for Cash Payment should go

Income Tax - Previously-in contravention of this section it was provided that 20% of the expenditure will be disallowed in case payment in excess of 20000/- is made otherwise than by crossed a/c payee cheque or Draft. At present it is provided that in contravention of this provision the whole expenditure I e 100% of the expenditure will be disallowed....

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Cash advance not claimed as deduction cannot be disallowed u/s 40A (3)

Income Tax - The assessee company is engaged in real estate business. It paid cash advance for purchasing a plot and reflected it in balance sheet under loans and advances given. The AO made addition of 20 % of amount paid as advance, invoking the provisions of Section 40A(3) of the Income Tax Act, 1961. ...

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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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No section 40A(3) disallowance on cash refund of excess money received on sale of goods

Asstt. Commissioner of Income tax Vs Kishore Singh Gehlot (HUF) (ITAT Jaipur) - This is an appeal filed by the Revenue against the order of Ld. CIT(A)-II, Jaipur dated 3.12.2013 for A.Y 2009-10 wherein the Revenue has taken following grounds of appeal...

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Direct cash deposit in suppliers bank a/c not attract disallowance u/s 40A (3)

Bolkunda Pachwai & (S) C.S. Shop vs. Income-tax Officer (ITAT Kolkata) - ITAT Kolkata held that the consequence, which were to be fall on account of non-observation of section 40A(3) must have nexus to the failure of object of introducing of the provision. Therefore, no disallowance can be made if the transactions do not defeat the object of Sec 40A(3) in as much as the...

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Books cannot be rejected for mere irregularities in case payment

M/s. Samwon Precision Mould Mfg. (India) Pvt. Ltd. Vs ITO (ITAT Delhi) - The books of accounts are duly audited and no defect has been pointed out vis-a-vis the sales, purchase or profit. The purported defects are confined to cash book, which have no nexus with the trading results....

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S.40A(3) No disallowance for genuine & bonafide cash transactions

ITO Vs M/s Pranay Towers (ITAT Delhi) - It is crystal clear that the terms of Section 40A(3) are not absolute and that the genuine and bonafide transactions are not taken out of the sweep and it is open to the assessee to furnish to the satisfaction of the AO, the circumstances under which the payment in the manner prescribed u/s 40A(3) w...

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Payment made in excess of Rs 20000/- should be allowed if made in business exigency

Manikanta Concerns Vs DCIT (ITAT Hyderabad) - ITAT held in Manikanta Concerns Vs DCIT that if the assesse had claimed deduction of shortage in weight or quality at the time of purchase then it did not mean that assesse could not claim deduction of shortage in weight or quality at the time of sale....

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Recent Posts in "Section 40A(3)"

S. 40(A)(3) Need to review proposed reduction in threshold limit from Rs. 20000 to 10000

Looking to the hard realities, practical problems of traders in respect of payments for the purchases for business, there was need to increase threshold limit of Rs. 20000/- instead it is proposed to be Rs. 10000/- w.e.f. from 1.4.2017(effective date i.e. from the start of the FY 2017-18)....

Read More
Posted Under: Income Tax | ,

No section 40A(3) disallowance on cash refund of excess money received on sale of goods

Asstt. Commissioner of Income tax Vs Kishore Singh Gehlot (HUF) (ITAT Jaipur)

This is an appeal filed by the Revenue against the order of Ld. CIT(A)-II, Jaipur dated 3.12.2013 for A.Y 2009-10 wherein the Revenue has taken following grounds of appeal...

Read More

Section 40A(3) Limit to pay cash expenses to be reduced to Rs.10000

Budget 2017 proposes ro reduce existing threshold of cash payment to a person from twenty thousand rupees to ten thousand rupees in a single day; i.e any payment in cash above ten thousand rupees to a person in a day, shall not be allowed as deduction in computation of Income from Profits and gains of business or profession...

Read More
Posted Under: Income Tax | ,

Disallowance of depreciation and capital expenditure on cash payment

Under the existing provisions of the Act, revenue expenditure incurred in cash exceeding certain monetary threshold is not allowable as per sub-section (3) of section 40A of the Act except in specified circumstances as referred to in Rule 6DD of the Income-tax Rules, 1962....

Read More
Posted Under: Income Tax | ,

Direct cash deposit in suppliers bank a/c not attract disallowance u/s 40A (3)

Bolkunda Pachwai & (S) C.S. Shop vs. Income-tax Officer (ITAT Kolkata)

ITAT Kolkata held that the consequence, which were to be fall on account of non-observation of section 40A(3) must have nexus to the failure of object of introducing of the provision. Therefore, no disallowance can be made if the transactions do not defeat the object of Sec 40A(3) in as much as there genuiness is not challenged and they ...

Read More

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

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...

Read More
Posted Under: Income Tax |

Books cannot be rejected for mere irregularities in case payment

M/s. Samwon Precision Mould Mfg. (India) Pvt. Ltd. Vs ITO (ITAT Delhi)

The books of accounts are duly audited and no defect has been pointed out vis-a-vis the sales, purchase or profit. The purported defects are confined to cash book, which have no nexus with the trading results....

Read More

S.40A(3) No disallowance for genuine & bonafide cash transactions

ITO Vs M/s Pranay Towers (ITAT Delhi)

It is crystal clear that the terms of Section 40A(3) are not absolute and that the genuine and bonafide transactions are not taken out of the sweep and it is open to the assessee to furnish to the satisfaction of the AO, the circumstances under which the payment in the manner prescribed u/s 40A(3) was not practicable or would have caused ...

Read More

100% expense disallowance for Cash Payment should go

Previously-in contravention of this section it was provided that 20% of the expenditure will be disallowed in case payment in excess of 20000/- is made otherwise than by crossed a/c payee cheque or Draft. At present it is provided that in contravention of this provision the whole expenditure I e 100% of the expenditure will be disallowed....

Read More
Posted Under: Income Tax | ,

Payment made in excess of Rs 20000/- should be allowed if made in business exigency

Manikanta Concerns Vs DCIT (ITAT Hyderabad)

ITAT held in Manikanta Concerns Vs DCIT that if the assesse had claimed deduction of shortage in weight or quality at the time of purchase then it did not mean that assesse could not claim deduction of shortage in weight or quality at the time of sale....

Read More
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