22 August 2014
there is no limit to cash purchases but yes, if the cash payment made to a particular party exceed Rs 20000, then that particular payment shall be disallowed.
23 August 2014
I think the disallowance is only for revenue exprnditure. Hence, no limit if an asset is being purchased. However, AO may still ask for proving availability of cash for asset purchase.
23 August 2014
Cash purchase (revenue expenses) limit from one party u/s 40(a) is rs. 20000 in a day. Cash purchase of assets have not limit but a.o have power to ask for availability of cash and if not setify with answer consider income thereof.