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Sec 40A(3)

Others 1061 views 7 replies

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

Replies (7)

no.

piyush

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".                         More over, there is no stated notification or case law given other than Rule 6DD.  The case is debatable and easily defeatable from department side.Thus there is a apparent possiblity of disallowance of depreciation or in some cases the entire capital expenditure.Taking in to account, the above consequences it is apt that it is not safe to incur such a expenditure in cash. 

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.........

No. It doesn't apply.

It applies to an expenditure which can be claimed as deduction u/s 30 - 37.

Originally posted by :CA Chaitanya
" It applies to an expenditure which can be claimed as deduction u/s 30 - 37. "


 

true,  but depreciation is an allowable expenditure u/s 32.  what about this depreciation,  can we claim the same ?

 

My quote is not displayed fully.  Please click on the "quote"  icon in my message box and read it fully. 

I have answered elaboratly including Mr, Krishnakumar query on depreciation.


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