Applicability of section 40a(3)

[SPJV Company]

assesee depoists cash into supplier bank accounts exceeding rs 20000/- , will 40a(3) dis allowance be applicablke

AI Summary

Debate on Section 40A(3) of Income Tax Act: Justifying Cash Deposits Over Rs. 20,000 to Suppliers' Accounts A discussion initiated by a company addressed the applicability of Section 40A(3) of the Income Tax Act concerning cash deposits exceeding Rs. 20,000 into a supplier's bank account. One respondent emphasized the need for detailed circumstances justifying cash payments over account payee cheques or drafts, suggesting reasons like urgent material dispatch or bank holidays. Another respondent warned that direct bank deposits might not exempt one from Section 40A(3) unless valid reasons are provided. Both responses highlight the necessity of justifying cash transactions to avoid disallowance under the tax provisions.