Section 40a(3)

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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)
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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)
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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)
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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)
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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

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