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SEC 40(A)(3)

Tax queries 1646 views 11 replies

I have query that as per SEc 40 (A)(3) cash payment above 20000 should be paid in cross cheque however

i have doubt that whether payment towards purchase of fixed asset also to be paid in Cheque if it is above 20000 or no need in particular is there in additions to income if payment already made

Replies (11)

if the payment is already made above Rs.20000 in cash the same is disallowed and there is no such provison for payment of purchase of Capital Asset in cash

as per u/s 40(A)(3)  any payment is disallowed as an business expense if the amt is above 20000 in cash.. it is to be paid by cross bearer cheque...

more over any purchase of fixed asset shud be made in cheque....

Any Payment in exceeding Rs 20000/- shall be made by cross cheue only. However same provision is not applicable on payments made towards  fixed assets. Thus payment in exceeding Rs 20000/- can be made by cash for the purchase of fixed assets.

Ankit Kansal

further query on this Sec. payment towards pur. of land in cash above Rs. 20k is allowed as exp. in Real Estate Business.

Mr.Natesh. Relax!!!!!!! You can very well purchase assets and make payments for it exceeding Rs.20000.00 in cash. There wont be any disallowance on that.

Sec 40(A)(3) specifically states that.Besides that, only expenditure which are charged to P&L account exceeding Rs.20000.00 paid in cash, only will be disallowed.you can very well purchase assets.

ya Mr. M.Sriram is right as when we purchase fixed asset we pass                  ASSET A/C.......DR

   TO CASH A/C

so there is no chance of allowance or disallowance...

Good one Mr. Sriram

Section 40A(3) is applicable even if an assessee prchased a depreciable assets.

its not applicable to capital assets

what will be tax treatment when closing stock transferred into investment?


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