car purchase in cash

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rushabh shah

rushabh shah (Querist)
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18 June 2011 what are the disadvantage of buying car in cash under income tax .

CA Rajendra Purohit

CA Rajendra Purohit (Expert)
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18 June 2011 If you are buying a car on individual name then as such there is no disadvantage provided your cash balance should be sound enough to cover up the transaction.

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rushabh shah

rushabh shah (Querist)
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18 June 2011 ACCORDING TO MY KNOWLEDGE IF WE BUY CAR IN CASH THEN DEPRECIATION WILL BE NOT ALLOWED AS PER SEC 40A(3)..
WHAT IS YOUR OPINION.

CA Rajendra Purohit

CA Rajendra Purohit (Expert)
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18 June 2011 If the car is purchased for the business purpose or in the name of company then depreciation will not be allowed as any payment in cash excess of rs. 20000 to any party will be disallowed.

rushabh shah

rushabh shah (Querist)
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18 June 2011 DEPRECIATION IS ALLOWED AS PER SECTION 32 AND NOT AS PER SEC 40A(3).
IS THE SEC 40A(3)IS OVERRIDING SEC 32 ??

CA KRISHNA KUMAR DARUKA

CA KRISHNA KUMAR DARUKA (Expert)
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19 June 2011 Purchase of Fixed asset is capital expenditure. This is a balance sheet item and not P/l item. So you can purchase fixed assets by Cash payment exceeding Rs. 20000/- no disallowance u/s 40A(3) of the IT Act, 1961.

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CA Rajendra Purohit

CA Rajendra Purohit (Expert)
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19 June 2011 Thank you very much to make it clear Sir..

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