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Sec. 40a(3)

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(Querist)
19 March 2012 Sir,
during vouching of cash book, i found one voucher for payment of franking(for purchase of land) to bank amount Rs. 301800. Debited to legal expense .my quarry is 1. Can it be capitalised? 2. Is it affect section 40A(3)? (payment made in cash more than 20000 or applicability of section 6DD)
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Rajnikant Vadigoppula

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Rajnikant Vadigoppula (Expert)
19 March 2012 1.yes it has to be capitalised.

2.expenses is allowed because it is paid to the government.
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CA Prashant Gupta

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CA Prashant Gupta (Expert)
19 March 2012 it will be capitalised. Now this is a capital exp not a revenue exp so 40A(3) will not be applicable. as it is applicable only on revenue exp.
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