Is depreciation disallowed u/s 40A(3), if an assessee purchase the depreciable assets by cash in excess of 20000.00 ??? If Yes, WHY ?? please give me some details.
Is depreciation disallowed u/s 40A(3), if an assessee purchase the depreciable assets by cash in excess of 20000.00 ??? If Yes, WHY ?? please give me some details.
CA Mohit Agrawal
(Chartered Accountant)
(371 Points)
Replied 08 April 2011
No depreciation cannot be disallowed you can claim depr
pryan
(prop)
(55 Points)
Replied 08 April 2011
Depr cannot be disallowed as it is an indirect exp . you are not shedding money to buy depriciation but it is an expense by virtue of wear and tear of the capital asset. VG sir supports this view and rightly so. The contention of singhania sir to disallow such depriciation does not seem to be appropriate.
shushantsinghal
(BCOM(HONS),C.A)
(283 Points)
Replied 08 April 2011
RULE 6DD SPECIFICALLY STATE U CAN PURCHASE CAPITAL ASSETS IN EXCESS OF RS 20000/-....IN CASH....
CA AMANPREET SINGH
(Chartered Accountant)
(284 Points)
Replied 08 April 2011
| Originally posted by : shushantsinghal | ||
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RULE 6DD SPECIFICALLY STATE U CAN PURCHASE CAPITAL ASSETS IN EXCESS OF RS 20000/-....IN CASH.... |
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as there is specific provision, no other view can be taken.
Arvind Sharma
(ACA)
(1432 Points)
Replied 09 April 2011
Depreciation is allwed on WDV which comprises Op WDV and Actual Cost of Addition during the year as reduced by sale proceeds of assests removed from block.
As per summry to provision of Sec 43, actual cost means whatever you had paid will be added to Cost of addition..
here nowhere is given that the payment should be in cash or in cheque or else, otherwise not to be capitalised...
And thus, in your case, the expenditure will form part of Block and depreciation shall be allowed thereon...
Hope I am right to the extent I knw... others view are invited...
U S Sharma
(glidor@gmail.com)
(21056 Points)
Replied 09 April 2011
| Originally posted by : Abhinav | ||
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Is depreciation disallowed u/s 40A(3), if an assessee purchase the depreciable assets by cash in excess of 20000.00 ??? If Yes, WHY ?? please give me some details. |
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40A(3) does not appears when the assesee gets any fixed asset by paying cash, so depreciation would be allowed.
however if fixed asset is procured on certain date and paid afterwards by cash in excess of 20000/- then such transaction is suspious in eyes of department, as the assesee has enough to time to book the payment through bank.
Mangesh
(Chartered Accountant)
(50 Points)
Replied 09 April 2011
Sec. 40A(3) is applicable even if an assessee purchased a depreciable asset. For instance , if X purchases an asset for business purpose and payment (say, Rs. 5 lacs) is made in cash , depreciation will be disallowed by virtue of section 40A(3).
SUSHIL UPADHYAY
(CA, CS)
(39 Points)
Replied 09 April 2011
Section 40A(3) and Rule 6DD clearly exempt from payment for a fixed assets in cash, so fixed assets can be purchased in cash, however depreciation is claimed and not paid in cash so Section 40A(3) shall not be applicable to Depreciation, It is ruled by Section 32 hence the depreciation can be claimed
Rounak Chawla
(CA Final Student)
(291 Points)
Replied 09 April 2011
ur capital expenditre ie purchase of asset will b dissallow if u pay amt>20000 in cash
bt dep on dat asset will surely b allowed...no doubt abt it....
CA Arindam Dey
(Chartered Accountant)
(117 Points)
Replied 10 April 2011
Mangesh
(Chartered Accountant)
(50 Points)
Replied 10 April 2011
/experts/depreciation-and-section-40a-3--201233.asp
https://taxlawsjournal.wordpress.com/category/income-tax/disallowance/
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