Section 40A(3) of income tax act

[Raj Malik]

Kindly suggest whether following exp will be disallowed or not u/s 40A(3)

1. Single transaction(Single voucher) is made in excess of ₹ 20,000 in which payment is made to different persons for diff exp.

2. Single voucher is made for the exp. incurred during whole month is more than ₹ 20000 for same party.

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AI Summary

Disallowance for cash payments may arise when a single voucher aggregates payments to multiple payees or monthly expenses.
Whether Section 40A(3) disallows expenditure where a single voucher exceeds the statutory cash threshold by (a) recording payments to different persons for different expenses in one transaction, or (b) recording a month's expenses for the same party in one voucher. The analysis turns on whether such single-voucher aggregation is treated as a disallowed cash payment and on the mode and identification of the payment(s).