If assessee has purchased a machinery and has hired a truck to transport it to his place of business and has paid Rs. 39,000 to the hire vendor by cash, then will the payment be added to the coat of machinery?
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How to calculate Actual Cost u/s 43(1)
Replies (5)
Yes, any costs relating to the installation of machinery can be added to the cost of that machinery to be depriciated further.
If the amount would have been paid in by any mode other than cash, then only it would have to be added with the cost of the machinery. But, as the payment have been made in cash which is violating Sec.40A(3), that's why it will not be eligible to charge depreciation on such amount.
Cost to bring to the place of installation can be added. However, Section 40A(3) has to be read herewith. Since the payment in cash exceeds Rs. 10,000 the amount paid in cash cannot be added to cost.
Furher, even if it is debited to profit and loss account, the same shall be disallowed u/s 40A(3)
it's not eligible for depreciation as per section 43 since the payment was made in cash
I too agree with A B Kundu, Vaishnavi Ganesh & Rama Krishnan.
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