sec40A3

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shubham (Querist)
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01 June 2011 sir
if the company is carrying on construction business and the land purchase for the construction ispartly paid in cash (exceeding 20000),then it would be disallowed or not.....also clear if registry charges paid on it is paid in cash (exceeding 20000) would it be allowed or not

Vivek Mehta (CA, DISA,CS, MBA)

Vivek Mehta (CA, DISA,CS, MBA) (Expert)
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01 June 2011 Company carrying on construction business usually does not sale's the land it just sales the appartments constructed on it. It does not transfers the title of land to anyone, in general, if this test holds good in your problem then there will be no disallowance attracted u/s 40A(3). But conversely if the land is part of stock in trade and the land is also sold along with the building that has been constructed on it then if any cash payment is made in excess of Rs. 20000. section 40A(3) shall be attracted.

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Vivek Mehta (CA, DISA,CS, MBA)

Vivek Mehta (CA, DISA,CS, MBA) (Expert)
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01 June 2011 In case of Registry ex[enses since these are paid to the governmental agencies, hence the section 40A(3) is not liable to get attracted even if the amount of registry charges are paid in cash in excess of Rs. 20000.

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