Income tax

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ASHIM (Querist)

06 September 2013 Respected Sir,
Please suggest me on the following Query of Section 40(A)3 of income tax act-1961

As Per Section 40A(3)(a) of the Income-tax Act, 1961 any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn On a bank or by an account payee bank draft, shall not be allowed as a deduction .
My query on this section is as follow:-
Is this Section 40(A) 3 applies on Depreciation on Fixed Assets which is
purchased in Cash above 20000?

If the answer of above question is yes, then can we claim Depreciation on that fixed assets in subsequent year or not?

Let’s assume that we have incurred a expenses of Rs. 30000 and received the bill of same amount but we made payment of Rs. 15000 at once and another 15000 at another date then in that case if this section applicable or not?
Is this section applies on capital expenditure (Which is allowed as
deductible) under income tax act?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

06 September 2013 We are not claiming the cost of asset as an expenditure or deduction.
.
We are not denied by the Act to purchase any Capital Asset in cash. Similarly depreciation claim is made mandatory by the act.
.
Section 40A(3) does not have overriding effect on the special provision of Depreciation contained U/s 32.
.
In my view, depreciation can be claimed.
.
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