Payment in excess of 20000

section 40a(3) is not applicable if assessee purchaces capital asset.....

Section 40A(3) is not applicable to Capital Assets and hence capital assets can be purchased by cash payment of above Rs.20,000/-. The Disallowance will be made only in respect of payments made and treated as Revenue Expenditure

Sir,

I am a trder/agent of Newspaper & Magazines. is there any possibility of disallowance u/s. 40A, If i pay exceeding Rs. 20000/- by cash to my creditors in asigle day against a single bill?

Please advice.

Thanks in Advance.

Regards,

Dulal Chattrjee

Dear Mr. Dulal Chattrjee,

You have not mentioned nature and type of creditor. if it is creditor for any capital assets purchased, than this case is out of this section i.e. Sec. 40A

If your creditor is creditor for expences(Revenue nature) than payment over INR.20000 is disallowed commonaly if we not consider allowed cases like expences for hiring, plying etc..

Simply dont take much tense its out of the perview of US 40(A)3 due to purchese is capital goods.

y all of u so confused .......

sec- 40A(3) clearly talks abt ONLY disallowance of any payment of REVENUE EXPENDITURE exceeding the limit (either 20000/- in case of all paymen  or 35000/- in case of payment of transport) ??

Purchase of Truck is a Capital expenditure ????

so where is the question of Disallowance???

again y r u going 4 the intention of law as many sections r introduced in the ACT which makes no sense at all..

still there r so many loop holes in many section..

and which leads to huge TAX evasion....

for capital expenditure provision of 20000 is not there                

It's Just Simple

How to Charge Expenses of Capital Asset in P&L A/c

Depreciation

So as per Section 40A(3) any Asset Purchased of Amount Greater than 20000 depreciation on it will be disallowed

The Motive behind to Stop Cash Payments Greatrer than 2000 is also to control the influx of black money