The document discusses various sections of the Indian Income Tax Act that specify amounts that are not deductible for tax purposes. Section 40(a)(i) discusses non-deduction of tax on payments made to non-residents where tax has not been deducted or paid by the due date. Section 40(A)(ia) covers the same for payments made to residents in India. Section 44AB mandates tax audit for businesses and professionals with income over certain thresholds. Section 40A(2) allows disallowance of excessive or unreasonable expenses paid to related parties. Section 40A(3) disallows expenses over ₹20,000 if not paid by account payee cheque or draft.

1. AMOUNT SPECIFICALLY NOT
DEDUCTIBLE UNDER SECTION 40
NOTWITHSTANDING ANYTHING
CONTAINED IN SECTION 30 TO
38,NO DEDUCTIONS SHALL BE
ALLOWED IN RESPECT OF THE
FOLLOWING:

2. NON-COMPLIANCE OF PROVISION
OFTDS WHERE PAYMENT IS MADETO
NON-RESIDENT.
SECTION 40(a)(i)

3.  Any interest, royalty, fees for technical
services, other sum chargeable under the
Act.
 Which is payable:-
 (a) Outside India or
 (b) in India to a Non Resident or to a foreign
company
 On whichTDS is deductible ,

4.  And suchTDS has not been deducted,or
 TDS has been deducted but has not been
paid during the previous year or in the
subsequent year before the expiry of the time
prescribed under Section 200 (1)
 SEC 200(1) says that the tax should be paid
by 7th day of the next month in which
deduction ofTDS is required to be made,

5. SEC 40 (A)(IA )-NON COMPLIANCE OF PROVISIONS
OFTDSWHERE PAYMENT IS MADETO A RESIDENT
 Any interest, commission or brokerage ,rent,
royalty, fees for professional services ,fees for
technical services
 Payable to a Resident
 On whichTDS is deductible and suchTDS has
not been deducted or after deduction
has not been paid on or before the due
date given in Sec 139(1).

6.  Provided that where in respect of such
sum,TDS has been deducted in the
subsequent year or has been paid in the
subsequent year then such sum shall be
allowed as a deduction in such year.
 Provided further that where the assessee has
failed to deductTDS and he is not treated as
Assessee in default under the first proviso to
SEC 201(1) then for the purposes of this
section ,it shall be deemed that the assessee
has deducted and paid the tax on such
sum,on the date of filing of ROI by the
resident payee and deduction of such
expenditure shall be allowed accordingly.

7. SECTION 44AB- AUDIT OF ACCOUNTS OF CERTAIN
PERSONS CARRYING ON BUSINESS OR PROFESSION
 Every person carrying on business shall ,if his
total sales,turnover exceed Rs. One crore
in any previous year,or
 Carrying on profession shall ,if his gross
receipts exceedTwenty Five lakhs rupees
in any previous year,
 Get his accounts audited by a chartered
accountant and furnish a report of such audit.

8. SECTION 40A(2)-PAYMENTS TO SPECIFIED
PERSONS NOT DEDUCTIBLE UNDER CERTAIN
CIRCUMSTANCES
The following disallowances shall be made notwithstanding anything contained in
any other provision of the income tax act :
 Where the assessee incurs any Expenditure
in respect of which payment has been made
or is to be made to certain specified
persons,the AO may disallow so much of the
expenditure as he considers to be excessive
or unreasonable having regard to the fair
market value of goods, services or facilities
for which payment is made.

9.  Q1) Assessee company sells goods
manufactured by it to its directors for
Rs.1,00,000.The market price of such goods is
Rs,175,000.AO wants to invoke Section
40A(2).Can he do so ?
 Q2) A company pays salary of Rs.30,000 p.m.
to its directors.The company decides to pay
further 1% of N.P. to its directors in addition
to the salary payment.Advise

10. If the assessee company proves that the salary
and commission are reasonable having regard
to the services rendered by the director then
Sec 40A(2) cannot be invoked.

11. SEC 40A(3)-PAYMENTS MADE OTHERWISETHAN BY
ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK
DRAFT
 The disallowance shall be attracted if the
following conditions are satisfied :
 Assessee incurs any expenditure in respect of
which payment or aggregate of payments made
to a person in a single day of a sum exceeding
Rs.20,000 otherwise than by account payee
cheque or account payee demand draft.
 Note-in case where payment is made to the
transporters for plying, leasing or hiring goods
carriages,per day limit for payment to a single
person is Rs.35,000.

12. EXAMPLE
 A bill is raised for expenditure of Rs.1,00,000
 Cash payments are made as under:
 Day 1 Rs.15,000
 Day 2 Rs.15,000
 Day 3 Rs.15,000
 Day 4 Rs.15,000
 Day 5 Rs.40,000
 Will all these payments be allowed ?