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Applicability of 40A(3)

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26 March 2008 URGENT! please clarify! my client has made cash payment for purchase of capital asset exceeding Rs. 20,000/-.Whether the expenditure will be disallowed! or Whether depreciation in that respect will be disallowed!
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CA. GOPAL SONIKA

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CA. GOPAL SONIKA (Expert)
26 March 2008 allowed as section 40A(3) does not cover capital expenditure
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CA Saurabh Maheshwari

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CA Saurabh Maheshwari (Expert)
26 March 2008 SECTION 40A(3) DISALLOWS ONLY REVENUE EXPENDITURE EXCEEDING RS 20000/- AND NOT CAPITAL EXPENDITURE EXCEEDING RS 20000/-,THEREFORE CAPITAL EXCEEDING RS 20000/- CAN BE PURCHASED IN CASH AND NO DEPRICAITION SHALL BE DISALLOWED
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CA Praveen Chopra

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CA Praveen Chopra (Expert)
26 March 2008 Section 40A(3) speaks in respect of expenditure only.since you have purchased a capital asset which is not an expenditure so there is no question of disallowance u/s 40A(3)regarding amount of capital assets purchased as well as depreciation thereon.
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CA Shailesh +91 9393926464

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CA Shailesh +91 9393926464 (Expert)
26 March 2008 Section 40A(3) does not cover capital expenditure. So, even if u pay amount exceeding Rs 20000/- in cash, not to worry.
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