Cash payment for the purchase of depreciable asset

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CA Santosh Bhagwat (Querist)
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09 October 2009 Dear Sir

If we make payment above Rs. 20000/- in cash for the purchase of fixed asset, then whether provisions of Section 40A (3)are attracted or not?

If it attract then which amount will be disallowed ? & why?

Shyam Lal Naik

Shyam Lal Naik (Expert)
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09 October 2009 Since it is a payment for capital expenditure, there is no question of any dis allowance.

C A Anjani Kumar mundhra

C A Anjani Kumar mundhra (Expert)
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09 October 2009 section 40A(3) does not attract

CA Suresh Choudhary

CA Suresh Choudhary (Expert)
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09 October 2009 agree with experts

chetan soni

chetan soni (Expert)
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09 October 2009 but the depreciation is booked as expenses. Hence this amount to indirect booking of cash expenses above 20K. Hence the depreciation on such asset will be disallowed u/s 40A(3).

Its my opinion.

Nazir

Nazir (Expert)
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09 October 2009 agreed with Chetan.. exactly..

Shyam Lal Naik

Shyam Lal Naik (Expert)
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10 October 2009 Beg to disagree that depreciation will be disallowed.

Depreciation is neither an expense or expenditure. It is an allowance.

The captioned section is not applicable to an allowance.