Capital expenditure 40 (a )(3)

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cavaradharajan

cavaradharajan (Querist)
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26 May 2015 can cash paid for capital expenditure more 20000? permissible?

Amol S Joglekar

Amol S Joglekar (Expert)
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26 May 2015 Firstly, 40 A (3) has always proved to be a debatable issue. The intent of legislature is that expenditure exceeding 20,000 should NOT be made in cash, except in certain cases. (The words "Payment" and "Expenditure" are used interchangeably under income tax)

Secondly, income tax always tries to distinguish between ACCOUNTANCY meaning of phrases and INCOME TAX meanings of the same. So to say, when capital expenditure is to be disallowed under income tax, ACCOUNTANCY oriented people get confused as to what is the exact implication of the same? Unfortunately income tax does NOT clarify this. Some extra intelligent people argue that depreciation on such capital expenditure is disallowed...etc etc..

Practical approach: Let tax auditor report such instances in Tax Audit Report.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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26 May 2015 all those expenditure which are deductible against the business income and charged or debited to profit and loss a/c but paid in cash exceeding 20,000 shall not be allowed.

suppose u pay 50,000 in cash for purchasing an asset which is in nature of capital exp and not debited to p n l then how it can be disallowed.

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