Cash payments

This query is : Resolved

amit kumar (Querist)
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04 March 2014 Dear sir, Can we do PURCHASES in cash in excess of Rs.20,000? will it b disallowed in 44AB but it is not expense?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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04 March 2014 Purchases is an expense. It is allowed as deduction while computing income under the head business or profession.

Accordingly if purchases are made in cash exceeding Rs. 20,000 then it will be disallowed u/s 40A(3).

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 March 2014 agreed with Siddhartha. Only where such purchase is a purchase of capital asset, disallowance is not attracted. otherwise disallowance is almost guaranteed subject to exceptions created under Rule 6DD

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