LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

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

abhishek (CA FINAL) (274 Points)

17 September 2013

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 :)

Reply
Follow
Share

17 Replies

Akash (CA Final Article Assistant) (1671 Points)
Replied 17 September 2013

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

CA Ramsai N (Fresher) (594 Points)
Replied 17 September 2013

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

1 Like

abhishek (CA FINAL) (274 Points)
Replied 17 September 2013

Thank you Ramsai :)

Can the depreciation be disaalowed ??

MANISH (student ) (172 Points)
Replied 17 September 2013

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

1 Like

abhishek (CA FINAL) (274 Points)
Replied 17 September 2013

hi Manish

thanks for your reply

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

parasmani pal (study) (33 Points)
Replied 17 September 2013

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.

1 Like

CA Mitesh N Kothari (9821662799) (391 Points)
Replied 17 September 2013

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

1 Like

CA Ramsai N (Fresher) (594 Points)
Replied 17 September 2013

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 (Accountant) (23 Points)
Replied 17 September 2013

If there is so much dispute its better not to purchase in cash

(Guest)

depreciation is not a revenue. . it is a an allowable deduction... no disallowance...

MANISH (student ) (172 Points)
Replied 17 September 2013

Depreciation is non cash expense....

Siddhartha (Student Audit Assistant) (272 Points)
Replied 17 September 2013

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)

CA Pallav Singhania (❤ Work Hard Party Harder ❤) (32102 Points)
Replied 17 September 2013

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''

1 Like