Section 40a(3)

This query is : Resolved

Share Report Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

16 August 2013 Payment for purchase fixed asset is allowed if payment made in cash more than 200000

Rupesh Jain

Rupesh Jain (Expert)
Follow

16 August 2013 purchases of fixed assets is exempted of cash payment more than Rs. 20000/-

but it is best to purchases by cheque or DD/

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
Follow

16 August 2013 Section 40a(3) cover sections 30 to 37 & section 32 depreciation is also comes under preview of above

Therefore assets purchased by cash payments will not get any Depreciation deduction under Income Tax Act

Ganeshbabu K

Ganeshbabu K (Expert)
Follow

16 August 2013 As per circular No.34 dated 05-03-1970, section 40A(3) applies only to purchase of goods for resale only will come under the section.

Moreover Section 40A(3) applicable only to the expenditure debited to profit and loss account..purchase of fixed asset will not comes debit to profit and loss account

So for purchase of fixed assets Section 40A(3) Not applicable

Thanks & regards
Ganesh babu k

Ganeshbabu K

Ganeshbabu K (Expert)
Follow

16 August 2013 *******Depreciation also allowed...

1)The nature of the depreciation is of allowance.

2)Section 32(1) says : the following deductions shall be allowed- So depreciation is based on certain percentage and use of assets for the purpose of business; owned wholly or partly.

3)The purpose of allowing depreciation is to give a booster to the industry. That is why additional depreciation is also allowed. So depreciation is not an expenditure.

4)CITATION:-

Disallowance u/s 40A(3) cannot be applied to depreciation. It has been held by Hon’ble Supreme Court in the case of
***Pandyan Insurance Co. Ltd. reported in 55 ITR 716 that depreciation is not ‘expenditure’.

5)Moreover it is Non-cash expenditure where as Section 40A(3) applicable to cash expenditure

Thanks & regards
Ganesh babu k

Message likes : 1 times

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

Aniruddha Mody

Rampal Saini

Jitin Aditya Kapur

Amirthalingam

George Innocent

Subscribe Now

Section 40a(3)

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA