Payment in cash in excess of rs 20,000/-

if a payment for purchase of fixed asset is made in cash and the amount of payment exceeds Rs 20,000/- what would be the consequences?

eg computer purchased for Rs 49000/- by paying cash.

 

Thankx in advance :)

 

Replies (17)

It will be disallowed u/s 40 a(3)

 Sec 40A(3) will applicable to the payments in revenue nature. Payments made for purchase of F.A does n not attracts Sec 40A(3) disallowance. 

One can claim Depreciation as will on purchased assets U/s 32 of IT

Thank you Ramsai :)

Can the depreciation be disaalowed ??

 

Originally posted by : abhishek

Thank you Ramsai :)

Can the depreciation be disaalowed ??

 

 

Depreciation can be claimed.

 

Only revenue nature expenses are disallowed as mention by Ramsai
 

hi Manish 

thanks for your reply

i have a doubt, is depreciation not a revenue expenditure?

It is. But computer is not revenue nature. When it is allowed to make a FA in cash above 20k. Then its depreciation is also allowed to dr in p&l.

Ramsai Neelam is Right since it is capital expenditure and not revenue expenditure it wont be disallowed.

 

Originally posted by : abhishek

Thank you Ramsai :)

Can the depreciation be disaalowed ??

 

Depreciation can be allowed as usually.

Depreciation is a revenue nature, but Computers on which you expended can't be endured during the year, i.e the benefit can taken over several years.

If there is so much dispute its better not to purchase in cash
depreciation is not a revenue. . it is a an allowable deduction... no disallowance...
Depreciation is non cash expense....

Section 40A(3) does not apply for purchase of fixed assets. Hence nothing will be disallowed u/s 40A(3). And you can claim depreciation on the actual cost of the asset as per Sec.43(1)

No, it is not applicable on Purchase of fixed assets or any other depreciable assets.

Section 40A(3) : expenditure ( other than capital assets) incurred in excess of 20000 not by an A/c payee cheque or bank draft in respect of which a payment/ aggregate of payment made to a person in a day shall not be allowed to be reduced as expense while calculating PGBP income.

No Dis-allowance can be made in respect of Depreciation...

''Janta Metal Supply Co. v/s CIT (1991) 100 CTR (All.) 52''

Depreciation is an Allowance and not Revenue expenditure.

Since in Sec.32 it is worded as Depreciation allowance and not Depreciation expenditure

 

Kindly correct me if I am wrong...

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