Disall of exp paid in cash n loss on sale of dep asset??

Hello everyone,

I have two practical queries that i am facing while computing total income of my clients

CASE 1

Assessee is liable for audit. It has paid professional fees of Rs.100000/- in cash without deducting TDS.

question : whether expense will be disallowed u/s. 40A(3) or 40(a)(ia). If 40A(3) is applied then full 100000 will be disallowed and if 40(a)(ia) is applied then only 30% of 100000 will be disallowed which is beneficial to the assessee ??

CASE 2

Assessee is liable for tax audit and it has sold a depreciable asset. opening wdv of block of blcok is 50000/- (containing 4 assets) one of the asset was sold for Rs.5000/-

now to compute depreciation as per income tax act we have to deduct Rs.5000/- from and on balance depreciation is calculated. 

However as per books opening WDV of asset sold is say 25000 and asset is sold on 30/04/2015 for Rs.5000/- then here there will be depreciation Rs.312.50 (till date of sale) and loss on sale of sale Rs.19687.50/-

Now for computing total income we have to add depreciation as per books(loss on sale is not added) and also higher depreciation is computed since loss is not deducted from block of assets. 

question : will both higher depreciation and loss on sale both be allowed ?

 

waiting for the views of the expets.

 

Replies (2)
Dear ankit,

as far as I know the following are implications:-

case1)

In this case 40A(3) will be attracted since the same was paid in cash so it will be disallowed.

section 40(a)(ia) will not be attracted here since the same was already paid. (section clearly specifies payable)

case 2:-

He will be not be allowed loss on sale of asset as deduction since it is a capital loss which has to be disallowed u/s 37

so he can claim only higher dep.

Thanks & regards,
Ajay

Thanks ajay for your convincing reply. It really helped.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 01 October 2026
Articled Assistant

KPSN & Associates LLP

Chennai

CA Inter

View Details
Company
ARTICLESHIP 28 September 2026
Junior Accountant

J S P M & Associates LLP

Pune

B.Com

View Details
Company
ARTICLESHIP 23 October 2026
CA Articleship / Article Assistant

M N Rao & Associates LLP

Vijayawada

CA Inter

View Details
Company
ARTICLESHIP 07 October 2026
Article Assistant

Malhotra Rajesh & Associates

New Delhi

B.Com

View Details
Company
08 October 2026
Account Executive

Elite Taxation

New Delhi

CA Foundation

View Details
Company
10 October 2026
Accounts Associate Level 1

Abic and Mani Chartered Accountants

Kottayam

B.Com

View Details
Company
ARTICLESHIP 23 October 2026
Articled Trainee

J Y & CO

Hyderabad

CA Inter

View Details
Company
12 October 2026
AUDIT , ACCOUNTS AND TAXATION

KDSS

New Delhi

B.Com

View Details