Sec 40A(3)

Hey everyone

I found in Taxmann`s Direct Taxes for CA Final by Singhania page 399 para 148.3 point 4 that Sec 40A(3) is applicable even in respect of depreciable asset i.e, if u buy a depreciable asset in for more than Rs 20000 in cash the depreciation allowable on that asset as per Sec 32 is disallowed. 

Can any one clarify?

Replies (2)

Ya that's true..

Even i also read that months ago..

When i asked one of the CAs in my firm, he said ya such interpretation is possible but in reality, in very few cases such type of disallowance is made..

I too believe that if we look rationally and strictly interpret the law, we can't nullify Mr. Singhania's interpretation..

 

Would also like to share same type of situation from the said book..

In case of firms & LLPs, while calculating book profit for determining allowable remuneration to partners (90% of first 3 lakhs and then 60%), we dont deduct b/f losses and unabsorbed depreciation from the book profit..

But Mr. Singhania says one should notionally deduct the unabsorbed depreciation as it is governed by section 32 which is different from other business loss..

For more elaboration, see the example on book profit calculation given in the chapter titled "assessement of firms"

ok i`ll see

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