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


abhishek (CA FINAL)     17 September 2013

abhishek
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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 :)

 

Akash

Akash (CA Final Article Assistant)     17 September 2013

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

CA Ramsai N

CA Ramsai N (Fresher)     17 September 2013

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 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

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abhishek

abhishek (CA FINAL)     17 September 2013

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Thank you Ramsai :)

Can the depreciation be disaalowed ??

 

MANISH

MANISH (student )     17 September 2013

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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
 

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abhishek

abhishek (CA FINAL)     17 September 2013

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hi Manish 

thanks for your reply

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

parasmani pal

parasmani pal (study)     17 September 2013

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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.
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CA Mitesh N Kothari

CA Mitesh N Kothari (9821662799)     17 September 2013

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

 

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CA Ramsai N

CA Ramsai N (Fresher)     17 September 2013

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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.

Govind Singh

Govind Singh (Accountant)     17 September 2013

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If there is so much dispute its better not to purchase in cash
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(Guest) depreciation is not a revenue. . it is a an allowable deduction... no disallowance...
MANISH

MANISH (student )     17 September 2013

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Depreciation is non cash expense....
Siddhartha

Siddhartha (Student Audit Assistant)     17 September 2013

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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)

Pallav Singhania

Pallav Singhania (❤ Work Hard Party Harder ❤)     17 September 2013

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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''

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Manideep E

Manideep E (Student)     18 September 2013

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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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