Where in respect of any expenditure incurred by the organization, any payment or aggregate of payments made in a day to a person exceeds Rs. 10000 and is not made through specified banking or online mode, then the expenditure by way of such payments shall not be allowed as a deduction. (Section 36(4))
Where any deduction was made in any preceding tax year for a liability incurred for any expenditure and payment in respect of such liability is made during a subsequent tax year and if such payment or aggregate of payments made in a day to a person exceeds Rs. 10000 and is not made through specified banking or online mode, such payment shall be deemed to be the income under the head "Profits and gains of business or profession" in such subsequent tax year. (Section 36(5))
The provisions of sections 36(4) and 36(5) shall not be applicable in cases and circumstances, as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors (Section 36(7)).
