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SEC 40(A)(3)

Natesh (CA Practice ) (71 Points)

06 June 2008

I have query that as per SEc 40 (A)(3) cash payment above 20000 should be paid in cross cheque however

i have doubt that whether payment towards purchase of fixed asset also to be paid in Cheque if it is above 20000 or no need in particular is there in additions to income if payment already made

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11 Replies

First!!!! (student) (162 Points)
Replied 06 June 2008

if the payment is already made above Rs.20000 in cash the same is disallowed and there is no such provison for payment of purchase of Capital Asset in cash

Rakesh Kumar (B.Com ( H ) Pursuing CA Final ) (327 Points)
Replied 06 June 2008

as per u/s 40(A)(3) any payment is disallowed as an business expense if the amt is above 20000 in cash.. it is to be paid by cross bearer cheque...

Rakesh Kumar (B.Com ( H ) Pursuing CA Final ) (327 Points)
Replied 06 June 2008

more over any purchase of fixed asset shud be made in cheque....

Ankit kansal (Professional) (43 Points)
Replied 06 June 2008

Any Payment in exceeding Rs 20000/- shall be made by cross cheue only. However same provision is not applicable on payments made towards fixed assets. Thus payment in exceeding Rs 20000/- can be made by cash for the purchase of fixed assets.

Ankit Kansal

Shashi Kumar C.G. (Articled) (158 Points)
Replied 06 June 2008

further query on this Sec. payment towards pur. of land in cash above Rs. 20k is allowed as exp. in Real Estate Business.

M.Sriram Shenoy (CA Final) (814 Points)
Replied 06 June 2008

Mr.Natesh. Relax!!!!!!! You can very well purchase assets and make payments for it exceeding Rs.20000.00 in cash. There wont be any disallowance on that.

Sec 40(A)(3) specifically states that.Besides that, only expenditure which are charged to P&L account exceeding Rs.20000.00 paid in cash, only will be disallowed.you can very well purchase assets.