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2006 (1) TMI 61 - HC - Income Tax"(a) Whether Tribunal was right in interpreting the provisions of section 40A(3) with regard to the word 'sum' used therein, i.e., as to whether it would indicate total sum or would it refer to each payment? (b) Whether Tribunal was right in holding that there was no violation of section 40A(3), even though the payments in respect of each invoice exceeded Rs. 20,000?" - held that section 40A(3) of the Act only says that the amount exceeding Rs. 2,500 as then, should not be paid except by way of cheque drawn on a bank or by a cross bank draft and if it exceeds that amount, then such expenditure shall not be allowed as deduction. It does not say that the aggregate of the amount should not exceed Rs. 2,500. The words used are "in a sum", i.e., single sum has been used. Therefore, irrespective of any number of transactions, where the amount does not exceed Rs. 2,500 as above, the rigours of section 40A(3) will not apply. Now, the amount should not exceed Rs. 20,000. That apart, practicability of the payment has also to be judged from the point of view of a businessman
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