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Sec 40A(3)

CA Nilesh Sodhani (CA) (411 Points)

29 April 2009

Is Sec 40A(3) applicable even in case of purchase of Depreciable Asset ??

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7 Replies

Piyush Jain (CA) (283 Points)
Replied 29 April 2009

no.

piyush

M. Gokulakrishnan (Assistant Manager - Taxation) (49 Points)
Replied 29 April 2009

Sec 40A (3) says any expenditure paid either single or in aggregate to a person....... Section 29 to 40A(3) basically deals with revenue expenditure/expenditure charged to Profit and Loss Acccount. On this strength, we can argue that 40A(3) applies only to revenue expenditure. But we have to face the following consequences:

1. The payment for depreciable asset is not charged to P&L A/c. But we are claiming the depreciation on the said asset for which the cash payment is made. Hence deduction of depreciation becomes a issue. 2. More over if you read the section 40A(3), it starts with the word "any expenditure".

Riyaz Khan (CA CS (Exec) MBA (Fin) Asst. General Manager-SEBI Internal Auditor-British Certifications Inc.) (1315 Points)
Replied 29 April 2009

Yes, Section 40A (3) only deals with the payment for any expenditure which is claimed from the Taxable Profits of the Assessee. If Assesse purchases any Asset and doesn't claim it as an expense in Trading and P/L Account, they he/she need not to worry. Be Happy, Dont worry.........