Depreciation and 40a(3)

in my opinion :

we can interpet sec40a(3) in this way too.

it is applicable to Revenue expenditure but depriciation is the spreading of a capital expenditure over the life of the asset so this should not be disallowed according to me

In my opinion Sec 40A(3) is clear enough. It uses the words,

1.assessee incurs any expenditure which is deductible under provision of the Act for computing business income

2.  A Payment (or aggregare of payments made to a person in a day) in respect of the above expenditure exceeds Rs. 20,000/-

As in case of depreciation there is no paymnet "in respect of the expenditure" but the payment is for acquisition of Asset.

Hence no question of disallowance.

Depreciation is an allowance and not an expenditure.Hence Sec 40A(3) not applicable to depreciation.

Dear Manoj 

first of all section 40A (3) is applicable on all revenue expenditure which is incurrered in cash and dep. is not an cash expenditure it is just a notional exp. because of existance of capital assets.

hence it dep can not be made disallowed only because of reason that we had purchased car in cash.