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Disallowance U/s 40A (3)(a) of the Income-tax

Posted @ May 16, 2013, 11:31 pm under (TAX AUDIT)

Disallowance U/s 40A (3)(a) of the Income-tax 

Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction.
However if payment is being made for plying, hiring or leasing goods carriages then Limit for these section is Rs 35000/-,instead Of 20000/-
Section 40A(3)(b) also provides for deeming a payment as profits and gains of business or profession if the expenditure is incurred in a particular year but the payment is made in any subsequent year in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque or by an account payee bank draft.

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