Applicability of 40A(3)
This query is : Resolved
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!
26 March 2008
allowed as section 40A(3) does not cover capital expenditure
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
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.
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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