Cash for Plot Expenses: Deductible or Capitalise?

This query is : Resolved

Quick Summary

This discussion explores whether a cash payment of Rs 40,000 made to a society for NA applications when selling a plot should be treated as a deductible expense or capitalised as part of the land cost. While some suggest capitalising it, there's a strong caution that cash payments, especially for fees that should be paid to revenue authorities, may not be allowed as an expense and could face disallowance. The consensus leans towards capitalising the cost while acknowledging the risks associated with cash transactions.

Arun Shah

Arun Shah (Querist)

27 October 2021 Rs 40,000/= paid to society in cash for NA Applications... while selling plot, is deductible as Exp or to consider cost of land... any problem for paid in cash ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

28 October 2021 You may consider it to cost of land.
But is it for NOC or NA application?

Arun Shah

Arun Shah (Querist)

29 October 2021 It us for NA to Socty, but in CASH?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

29 October 2021 First of all society cannot take NA charges, as it is the revenue authority who can charge for that. If it it contribution collected from all the members, no problem if proper receipt provided by society.

Arun Shah

Arun Shah (Querist)

29 October 2021 Yes right, but Socty organized and paid to Authority...and collected from members. Official recept given..when paid in Cash will be allowed as Exp or to capitalise as cost ???🙏🤔

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

29 October 2021 You may capitalize it to cost, though with chances of its dis-allowance .

Arun Shah

Arun Shah (Querist)

29 October 2021 🙏😄 OK thanks sir, will be allowed as Expense (though paid in cash)..????

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

29 October 2021 It is not expense as such, as paid at the time of purchase of land.
Secondly, it will never be allowed when paid in cash.

Arun Shah

Arun Shah (Querist)

29 October 2021 Ok MANY MANY THANKS FOR PROMPT REPLY 👍 😀 🙏 😊