Disallowance of cash??

There are two possibilities for above.

1. Whether the property is capital asset.

2. Whether the property is stock in trade.

Now,

If it is case 2, then the amount paid in cash will be disallowed in the year you claim it as expenses.

If it is case 1, then the amount paid for land and materials in cash are for capital assets and cannot be treated as expenditure for the purpose of section 40A(3). Hence should not be disallowed.

However the same is prone to litigation.

hi,in ur case  i thought the following assertions are correct

a)LAND

as Anil is a builder,it would be stock in trade. in such case any payment for a bill wheather it is advance or final payment any payment made in excess of 20000 would be disallowed.in ur case as such payment involves two financial years,u can claim deduction in respect of advance made in  financial year 2012-13 and in second year once bill issued by the seller and entire advance amount of 30 lakhs is relating to one bill ,then advance of rs 30lakhs should be shown as income in  financial year 2013-14

b)MATERIAL

same provisons will apply if it would be a capital asset

hi,in ur case  i thought the following assertions are correct

a)LAND

as Anil is a builder,it would be stock in trade. in such case any payment for a bill wheather it is advance or final payment any payment made in excess of 20000 would be disallowed.in ur case as such payment involves two financial years,u can claim deduction in respect of advance made in  financial year 2012-13 and in second year once bill issued by the seller and entire advance amount of 30 lakhs is relating to one bill ,then advance of rs 30lakhs should be shown as income in  financial year 2013-14

b)MATERIAL

same provisons will apply if it would be a capital asset

Yes sir, even a builder can have the property as capital asset.

Eg: Say, Builder A has a land and building on Plot XYZ. The plot is a capital asset of the builder as he is staying there.

Now being the owner of the plot, he decides to develop the land.

On development, the area held earlier by him would be treated as capital asset and balance would be his business.

Hope you get the point from my example.

In case if not then please revert i would explain in detail.