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40a(3) depreciable asset

Akash Nahar (Chartered Accountant) (38 Points)

16 April 2016

Hello I want to know that whether we can purchase fixed assets in cash or not because of section 40a(3). Doubt is for depreciation allowance.

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13 Replies

Shubham Gupta (Business Consultants) (2077 Points)
Replied 16 April 2016

Sir,

You can purchase fixed assest for cash.

40a(3) disallows expenses paid in cash exceeding 20000Rs.

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 16 April 2016

The Ao can disallow depreciation if cash in excess of 20000 paid. But as depreciation is allowance you can claim it. But this is a debatable matter.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 16 April 2016

you can purchase fixed assets for cash. there is absolutely no issue in this. sec 40A(3) is applicable only in respect of expenditures.

C.SENTHIL KUMAR (CA-IPCC & CS-EP ) (83 Points)
Replied 17 April 2016

Purchasing Fixed Asset also expenditure only but not expense.....

kaushik (student) (22 Points)
Replied 17 April 2016

40a (3) limits exceeds to rsl. 35000

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 17 April 2016

i meant revenue expenditure...

Suseendran (Manager-Accounts) (51 Points)
Replied 17 April 2016

Any expenditure debited to P&L A/c can be disallowed u/s 40A(3) if it is paid in cash in the nature of revenue nature. sometimes we can claim 100% depn or lesser value capital assets. In such case 40A(3) will not attract as it does not exceed 20000 I hope

prashant (student) (21 Points)
Replied 17 April 2016

Sec 40a 3 deals only wid revenue expenditure purchase of fixed asset is a capital expenditure

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 17 April 2016

@ prashant... you are partially correct because it includes those cap. exp. where 100% deduction is allowed to assessee. for example cap. exp. on scientific research.

Suseendran (Manager-Accounts) (51 Points)
Replied 17 April 2016

Section 40A(3). Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.

NISHIT MAJETHIYA (ARTICLESHIP) (71 Points)
Replied 19 April 2016

Sec 40A(3) disallows expenditure if paid in excess of 20000, which was otherwise be allowed under section 30 to 37, So it can disallowed if asset purchased by cash above 20000. (Depreciation claim - sec 32)

Suseendran (Manager-Accounts) (51 Points)
Replied 19 April 2016

section 40a3 applicable only for revenue expenditure not for capital expenditure

Akash Nahar (Chartered Accountant) (38 Points)
Replied 21 April 2016

Dear all members

I have gone through the Income tax ready reckoner and found that depreciaton will be disallowed if fixed assets exceeding Rs. 20000 purchased in cash.

So please check the same and inform me.

Thank You