Disallowance under section 40A(3) Cash deposited in bank account of supplier
Cash deposited directly in bank account of supplier by its dealer/customers would be allowable and not hit by section 40(A). For this purpose the decision in Sri Ranukeswara Rice Mills v ITO (2005) 278 ITR 77 (Bang-Trib) may.
It was held that the payment made by depositing cash to payee’s bank account fulfils the object of section 40A(3), therefore, no disallowance could be made for the same.
No.TDS provision under section 194C would not be applicable in case of continued audit of proprietorship firm (individual) from last three years. Under section 44AD/AF because provision under section 194C would be applicable only it the audit is carried out under clauses (a) or (b) of section 44AB.
Source:
The tax Publisher, Volume 122 Issue No.6 12th Dec 2011
