depreciation

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firoza (Querist)
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15 May 2009 the Fixed Asset purchased by Cash the amount which is more than Rs. 20000 and the depreciation of that asset is allowed or not

Vipul J. Bhavsar

Vipul J. Bhavsar (Expert)
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15 May 2009 Ofcourse, depreciation will be allowed. However as the expenditure is above Rs.20,000 in cash, 20% of the amount of expenditure will be included under the head "Profit and Gains from Business/Profession"

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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15 May 2009 Depreciation on assets purchased in cash in excess of Rs.20,000/- is allowable u/s 32. Provisions of section 40A(3),in such cases, will not attract for the cost of the asset as well as for its depreciation.

Vipul J. Bhavsar

Vipul J. Bhavsar (Expert)
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15 May 2009 As in the given case the expenditure is Capital Expenditure, no question arises for disallowance of 20% of the expenditure. 20% disallowance was applicable only on Revenue business expenditure.
Presently, if any revenue business expenditure made in cash above Rs.20,000/- whole of such expenditure is disallowed.

Thanks Mr.Chackrapani for correcting me.

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