11 June 2010
whether sec 40A (3) is aplicable to a payment made in cash for purchase of Land. I have gone through the books and got a circular no. 34 dated 5th march 1970 which states that payment could be made in cash for purchase of Capital Assets. But I still a doubt reguarding the validity of the said circular. Please help me out.
11 June 2010
Section 40A(3) does not apply to expenditure which is not to be claimed as deduction u/s 30 to 37. Purchase of land is capital expenditure. Under section 37, only revenue expenditure is deductibele. Hence 40A(3) is not applicable to purchase of land in cash.
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