QUERY IN RESPECT OF BUILDER SHIP BUSINESS

HI Umashankar,

Plz read below first:

The provisions of section 40A(3) would apply in computing the income under the heads “Profits and gains of business or profession” and “Income from other sources” as per section 58(2). All payments in excess of Rs. 20000 at one time whether for goods or services obtained for cash or credit, which are deductible in computing the income, have to be made by crossed cheque or bank draft. Thus, the price of goods purchased for resale or use in manufacturing process or payments for services will be covered by the provisions of section 40A(3).

 I have taken this from a Case law. As per the clarification in the case law it clearly seems that this section applies to Buliders also on purchase of Land as such land will be Stock in Trade (Goods) for them.

This clarifies that Builders are also covered by this section on purchase of land in cash as such land is Stock in Trade(Goods) for them.

sir such transaction which i have clarify in my question is finally being deductible or dis allowed from any deduction.

plz reply

If you charge off this through P/L account, department taking into consideration Sec 40A(3), will dissallow. I will advice not to deduct it for calculating TAx. In accounting books of course you need to book.