Purchase of land.

Sorry guys..category is Income tax instead of custom.

I dont know about legal provision but my reply is as below:-

If the case is where Land is a Capital Asset....

FIrst of all., a small peace of land for construction of a building will not be less than of Rs. 10 Lacs (assume so)., Although, as far I remember, there is no provision in Income Tax for payment of Cash on Capital Account.., but If you are going to pay in cash, such a huge amount, this may lead a problem to you to prove its sourse unless the same is withdrew from bank and you can substentiate the reason of such problem.., otherwise, AO will add such cash payment as unexplained expenditure in your total Income....

If the case is where Land is not a Capital Asset and the cost is routed through PL Account:-

In this case, Sec 40A will get attract, and entire payment which made in cash, shall be disallwed....

Others view are invited......

Yeah..bcoz in the case of a real estae co. the land will be treated as stock insteads of a fixed asset.