40 a(3) for fixed assets

Tax queries 577 views 4 replies

Sir,

Is 40 A(3) disallowance applicable for Purchase of Fixed Assets?

Thanks in advance

Replies (4)

Hi

According to Sec 40A3, there are no specific guide lines for cash payment exceeding Rs 20000/- shall be disallowed whether it is for Expenses or it is for Purchase of assets. 

I think if you make cash payment on purchase of any assets exceeding Rs 20000/- shall be disallowed.

dear muhammad rafnas and ravi,

it has been clearly laid out that the provision under sec.40 A(3) shall not apply inrespect of expenditure for which no deduction is claimed, namely capital expenditure.

in this case there is no reason for dissalowance since we are not claiming an expence.

Some AOs have a tendency to disallow the depreciation on capital assets where such assets are purchased in cash for more than 20,000.

Thanks,

Agree with Joswin Tony. No disallowance u/s 40A(3) is called for in this case.
 


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