40 a (3)

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vijay dhirajlal parekh (Querist)

24 September 2013 1)whether cash purchase exceeding 20000 rs allowed or not?

2)whether down payment made of purchase of car for business purpose in cash exceeding 20000 rs allowed or not?

3) whether depre. allowed or wat?& if it is allowed then to wat extent?related to above question

4)whether digital signature of assessee is compulsory in case of tax audit or wat?

Ganeshbabu K

Ganeshbabu K (Expert)

24 September 2013 1)Disallowed under income tax act

2)Allowed because it is not expenditure,,moreover cash purchase of assets will not come under purview of 40A(3)

3)Depreciation is allowance,,no disallowance on depreciation under any case by virtue of 40A(3)

4)yes DSC Compulsory for taxaudit cases,,he need to engage CA and approve CA and he need to approve tax audit report uploaded by his tax auditor,,for all this it is mandatory to have DSC

mandatory to file return with dsc

CA Parul Saxena

CA Parul Saxena (Expert)

24 September 2013 Agreed with the expert

vijay dhirajlal parekh

vijay dhirajlal parekh (Querist)

24 September 2013 Thanks for your prompt reply but i m talking about dsc of assesee so tell me about that? i know k dsc of ca is compulsory in case of tax audit.

vijay dhirajlal parekh

vijay dhirajlal parekh (Querist)

24 September 2013 As per taxmann vinod singhaniya direct tax ready reckoner , in that it is clearly mention that any cash purchase of fixed asset exceeding 20000 rs. then depre. on that is disallowed and u said that it is allowed so tell me whether it is your openion or u have any back up to support your answer?

CA Parul Saxena

CA Parul Saxena (Expert)

24 September 2013 depreciation is allowed as section 40a(3) is related with revenue expenditure and not the capital expenditure. Depreciation is related to fixed asset so it has no direct nexus with section 40(a)(3)

Nikhil Kaushik

Nikhil Kaushik (Expert)

24 September 2013 dear Vijay,

Yes, if the tax audit is applicable then you need to file ITR with Assessee's DSC.

Nikhil Kaushik

Nikhil Kaushik (Expert)

24 September 2013 with regards to applicability of 40A(3) to depreciation, please note that in the case of Pandyan Insurance Co. Ltd. reported in 55 ITR 716, Supreme Court held that depreciation is not ‘expenditure’. Therefore, depreciation cannot be disallowed u/s 40A(3). Further, this view is fortified by the recent judgment of Delhi ITAT in the case of SMS Demag Private Limited reported in 3 taxmann.com 37.

Now if depreciation is not an expenditure, it cannot be disallowed under 40A(3). Needless to say, tax authorities may take different view on this.

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