14 April 2015
I have paid Rs. 50,000 for freight to a single party on a particular day for material to be used for capital asset construction of edible oil plant and rs. 50000 cash to engineer for his professional fees for giving design of structure. Whether 40A(3) will be attracted to these expenses or not. And whether professional fees paid will be treated as preliminary expense or it is to be capitalized. Please give important expert advise as soon as possible.
16 April 2015
Yes. Here sec 40A(3) gets attracted and entire payment will be disallowed as you have made payment in cash for more than Rs.20k to a single party in a single day. Fees paid to professional can be capitalized in fixed assets
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