Morethan Rs.20,000 cash payments - capital expenditure

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2011
Dear All,

Under Income Tax Act, more than rs.20,000 cash payments will be disallowed u/s 40A(3).
Is it for revenue expenditure or capital expenditure also.

Can we pay cash payment more than 20,000/- in case of capital expenditure?
For example Construction labour, Machiney purchase, Contractors for construction work etc.

Please clarity.
Thanks in advance.

Sunil Kr. Sanganeria

Sunil Kr. Sanganeria (Expert)
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18 February 2011 Yes, Section 40A(3) is applicable only for revenue expenditure not for Capital Expenditure.

For Construction Labour and Contract for Construction work, you cannot pay cash

For Machinery Purchase, it can be

Guest

Guest (Expert)

18 February 2011 Cash payment for any capital expenditure can not be disallowed u/s 40A(3).

Querist : Anonymous

Querist : Anonymous (Querist)

19 February 2011 Thanking you sir,

For construction labour expenses, we are paying them on daily basis based on no. of workes count, and we are adding that expenditure to land / building cost as applicable. Please note that they are not our company employees and there is no any agreement between company and labor workers.
Coming for work or not on a particular day depends on them only.

Here I am seeking your best advice and procedure in this quest.

Once again thanking sir,
Swamy.K

Guest

Guest (Expert)

20 February 2011 No problem.