Disallowences

For purchase of asset there is no maximum limit

but,Section 43B states that if any expenses paid by any assessee more than Rs.20,000 to be disallowable

for purchase of asset  there is no such provision

After amendment of section 40(A)(3) , if  an asset has been purchased in cash exceding Rs 20,000  in cash .............depreciation on such asset may be disallowed.

The old provison stated as follows:

"twenty per cent of such expenditure shall not be allowed as a deduction"
.
" The amended provision states as follows;

"no deduction shall be allowed in respect of such expenditure;"

The amendment is applicable from asst year 2008-2009.

In view of the amended language, depreciation claimed in respect of expenditure on capital asset purchased in cash exceeding the limit will also be disallowed.
Tax audit report should report accordingly for asst year 2008-2009.

For earlier years however , capital expenditure is not covered u/s 40(A)(3

no the amount is not disallowed as the purchase of asset does not gets routed through the profit and loss account so on purchase of assets one can make payment exceeding rs.20000 in cash.and section 40A(3) is not applicable here.

no the amount is not disallowed as the purchase of asset does not gets routed through the profit and loss account so on purchase of assets one can make payment exceeding rs.20000 in cash.and section 40A(3) is not applicable here.

DEPRECIATION IS  DEDUCTION  IN RESPECT OF SUCH EXPEDITURE  ..............HENCE WILL ATTRACT THE AMENDED SECTION 40(A)(3)

I agree with Mr Sampat Jain

u/s 40a(3) any expenditure in cash above rs.20000 is disallowed irrespective of cap exp or rev exp.

in case of capital expenditure the depriciation will be disallowed

yes

purchase of a depreciable assets is covered under sec.40A (3)

hence it will be totally disallowed under income tax act

can deduction be claimed u/s 80IB on interest earned on income tax refund?