Buying a second hand vehicle for private company

Not any necessity, but through bank it would be better.

Agreed with Ashish, 

As Bank transaction gives more transparent views & which also can act as a proof for the payments. 

You shall pay the amount to third person through Bank or Cash if the Sale consideration is less than Rs 20000/-. According to Section 40A(3) of Income tax act 1961.any payment to single person on a single day which exceeds Rs 20000/- shall be disallowd as expenditure for income tax purposes. If the amount payable is greater than Rs 20000/- then pay through bank or cash in installments less than Rs 20000/- on different days.

I agree with ravi chandra

Hello Ravi,

I read Sec 40A(3), it speaks about expenditure, not for assets. I think they can make payment by cash exceeding Rs.20k for asset.

Section 40A(3) of Income tax Act, 1961 read as follows Section 40A(3) Where an assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. There is no specified for expenditure to get assets.