Dear Sir/Madam,
Please clarify the below Query u/s 40A(3)
Mr. X purchased goods on credit on 01.08.2017 for ₹ 29,000. He makes payment of bills as follows:- On 02.08.2017 ₹ 10,000 On 03.08.2017 ₹ 9,000 On 04.08.2017 ₹ 10,000.
He made all 3 bills through cash payment.
Whether such an expenditure shall be allowed or disallowed u/s 40A(3)?
Cash Payments on Credit Purchases: Applicability of Section 40A(3) of Income Tax Act for Mr. X's Transactions A user inquired about the applicability of Section 40A(3) of the Income Tax Act concerning cash payments made by Mr. X for goods purchased on credit. Mr. X paid a total of 29,000 in cash over three days in August 2017. The question was whether these expenditures would be allowed or disallowed under Section 40A(3). The response provided by another participant indicated that, in their opinion, the expenditure would be allowed. (AI Summary)
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