Urgent tax query

Sec 40 A(3) do not apply to repayment of loans or payment towards the purchase price of capital assets [circular no-34 ,dated -5th march,1970]

In respect of Depreciation, it cannot be disallowed as Sec 40 A(3) is not applicable.

Hi,

Please note that any expenditure incurred in excess of RS20k & that is required to be routed through P&L account are only disallowed u/s 40(A)3.

As regards purchase of assets no disallowance is required to be done as these are B/S items & are not routed through the P&L account.  As regards depreciation it is only an loss and not an expenditure.  Hence where there is a loss no disallowance u/s 40(A)3 is require to be made.

Hence the expenditure incurred on 1,2&3 will not be disallwowed.

Hope the above would help you in undertanding the disallowance.