Query on Amendment in Section 43(1)

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neetu

Student

84 Points Joined January 2010

A Plant & Machinery has been purchased for Rs. 1,50,000/- against which RS. 1,00,000/- has been paid vide Cheque & RS. 50,000/- has been paid vide Cash.
Now as per amendment in Section 43(1) vide Finance Act, 2017, only RS. 1,00,000/- shall be treated as part of cost of the asset & Rs. 50,000/- shall be ignored for the same.

I have Query regarding treatment of the same in books of accounts of the assessee.
As per the amendment, depreciation shall be eligible on amount of RS. 1,00,000 i.e 15,000/-, but how to treat RS. 50,000/- paid in cash in the accounts? Whether the same shall be disallowed???
If yes, then disallowance under which section??
As capital expenditure debited to profit & loss account
OR
Under section 40A(3) which talks of any expenditure..?
Kindly resolve my Confusion....

Replies (5)

rama krishnan

12244 Points Joined May 2017

1. only amount paid in account payee cheque or do or ecs will be taken as actual cost of asset and the balance amount will be disallowed under section 43. so only 100000 will be considered as cost of asset

neetu

Student

84 Points Joined January 2010

But Section 43 doesn't talk of disallowance anywhere specifically... how to disallow the same in return of income...

rama krishnan

12244 Points Joined May 2017

there's no requirement for disallowance... only for the purpose of computing depreciation it'll be disallowed and the proportionate disallowed depreciation will be added to profit and not the entire cash payment made for acquiring fixed asset

neetu

Student

84 Points Joined January 2010

it means Cost of Asset shall remain 1,50,000/- in books and depreciation of 15,000/- shall be allowed only instead of 22,500/- and the closing wdv of the asset in books will be 1,35,000/-.
Is it so...???