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40a(3) depreciable asset
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.
Replies (13)
Sir,
You can purchase fixed assest for cash.
40a(3) disallows expenses paid in cash exceeding 20000Rs.
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.
you can purchase fixed assets for cash. there is absolutely no issue in this. sec 40A(3) is applicable only in respect of expenditures.
Purchasing Fixed Asset also expenditure only but not expense.....
40a (3) limits exceeds to rsl. 35000
i meant revenue expenditure...
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
Sec 40a 3 deals only wid revenue expenditure purchase of fixed asset is a capital expenditure
@ 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.
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.
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)
section 40a3 applicable only for revenue expenditure not for capital expenditure
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
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