adjtmnt of cash loans

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kabita todi (Querist)
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09 March 2009 i have given cash loans to my supplier totalling rs.300,000 .in instalments of 30,000 ; 100,000 ;100,000; 70,000.
later on from same supplier i purchased one machinery item costing 3.5 lakhs .
can i adjust cash loans against purchase from same party ?

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
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09 March 2009 it can be adjusted and than machinery need to be capitalized. depreciation U/S 32 can b claimed.

kabita todi

kabita todi (Querist)
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10 March 2009 machinery purchased is not my capital asset. it is my trading item .

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
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11 March 2009 US 40A(3) u wont be allowed deduction for cash loan for trading purchase.

so better if u dont set off.

better if u make payment for machinery by account payee cheque or draft.

kabita todi

kabita todi (Querist)
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13 March 2009 sec40A(3) and rule 6DD are applicable only for deductions under sec 30 to 37.
giving loan in cash is not covered under the above sections .

rule 6DD allows adjustment entries .

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