40a(3)

Only expenses that are routed through the P&L A/c attract teh disallowance u/s 40(A)(3).  Capital expenditure are shown in the B/S, so no disallowance will get attracted.

In section 40(A)(3), the word "any expenditure" is used. In that regard does the word expenditure includes capital expenditure; as no definition of "expenditure" is given in the act..?

while calculating the business income the net profit as per P&L account is taken into consideration and the allowables/disallowables are adjusted to the net profit.  So any expenditure that is debited to P&L whihc shud not have been debited or is in excess or is voilated by law is only disallowed.  So even if capital expenditure is an expenditure it is not debited to P&L & capitalized to B/S, so no disallowance.

Capital Expenditure are amortised by charging to P/L in the form of Depreciation. In juxtaposing to your reply, can any disallowance be made in depreciation for  in regard to that capex for which payment is made in excess of Rs. 20000.??

the wording of section 40(A)(3) states about "An Expenditure".  Depreciation is an loss in the value of machinery due to it's use & hence not considered as an expense.  Hence no disallowance will be considered for depreciation even if the amount exceeds Rs 20k.

hope the above is clear.

In regard to disallowance of depreciation, i would like to draw your attention to Direct tax Ready Reckoner 33rd edition (and onwards) of Dr. Vinod Singhania, wherein he mentioned about disallowance of depreciation on depreciable assets purchased in cash in excess of Rs. 20000. Please clear the confusion.

Please note that for B/s items the expenditure incurred to any extent in cash will not be liable for disallowance as they are not debited to P&L A/c.

Moreover section 40(A)(3) talks about the word "An expenditure" & not loss.  Depreciation being a loss in the value of the asset due to its use is not liable for disallowance under the said section.  So I think that we would go by the  provisions stated in the law.