Rule 6DD

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CA Mehul Mehta (Querist)
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08 May 2009 Hi,
If i purchase any asset and make payment exceeding Rs. 20000 in cash then will it be allowed as deduction u/s. 40A(3). For instance, if i purchase computer for Rs. 30000 and paid full amount in cash, then will it be allowed.
If possible also give reference of any circular or judgement.

send a mail on mehul7285@gmail.com

Thanks in advance.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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08 May 2009 Section 40 A(3) does not apply in respect of an expenditure not claimed as deduction u/s 30 to 37. Like wise if the purchase of capital asset is not meant for sale the said section is not applicable.

Reference:- Cir.No.34 dated 05/3/1970.

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CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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08 May 2009 I agree with Warrier Sir. Although one writer has mentioned in his book that in such case, the depreciation part is disallowed on such asset, but no other member or author is found consented with him till today to me.

taxindiaconnect

taxindiaconnect (Expert)
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09 May 2009 Rule 6DD apply only to revenue expenditure. Even the depreciation can not be disallowed on capital assets purchased by paying cash.

CA Mehul Mehta

CA Mehul Mehta (Querist)
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11 May 2009 Thank you all for your valuable input.

But as Rule 6DD is not applicable to capital expenditure. So can i purchase an asset of say Rs. 4 lacs by cash payment and also can i claim depreciation for the same.

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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11 May 2009 Yes, You can do so. And can claim depreciation also.

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