sec-40A(3)

This query is : Resolved

girish (Querist)
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05 November 2007 hi all
I have purchased computer for Rs.50000 in my business. The payment has been made in CASH.Which is a capital expenditure.

Does this amount disallowed ?

Ravikumar.G

Ravikumar.G (Expert)
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05 November 2007 6DD rule is not applicable for purchase of a capital asset not meant for resale. Please read (C.No 34/5.3.1970)

KAAPIL

KAAPIL (Expert)
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05 November 2007 Rule 6DD does not apply to capital asset not meant for resale.

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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06 November 2007 Section 40(A) earlier read as follows:

(3) Where the assessee incurs any expenditure51 in respect of which payment is made, after such date (not being later than the 31st day of March, 1969) as may be specified in this behalf by the Central Government by notification in the Official Gazette, in a sum exceeding [twenty] thousand] rupees otherwise than by [an account payee cheque drawn on a bank or account payee bank draft], [twenty per cent of such expenditure shall not be allowed as a deduction] :

The following sub-section (3) shall be substituted for the existing sub-section (3) of section 40A by the Finance Act, 2007, w.e.f. 1-4-2008 :

(3)(a) Where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure

SO EARLIER:
[twenty per cent of such expenditure shall not be allowed as a deduction]

AND NOW:
no deduction shall be allowed in respect of such expenditure

SO the position is this earlier expenditure was disallowed ......since capital expenditure was never allowed as expenditure , the question of disallowance did not arise.

BUT , now no deduction is to be allowed inrespect of such expendiuture. Depreciation is an deduction allowed in repect of capital expenditure made . Therefore , now if capital expenditure is incurred in excess of RS 20000/- i n cash , deduction in respect of such expenditure , i.e. depreciaiton may be disallowed

Ravikumar.G

Ravikumar.G (Expert)
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08 November 2007 Thanks Mr.Sampat Jain for your information

KAAPIL

KAAPIL (Expert)
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08 November 2007 Thanks to Mr. Sampat Jain.

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