Purchase over rs.20000/- by cash
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
25 February 2014
If mobile is purchased above Rs.20000/- by Cash for business then will its purchase be considered. I mean depreciation will be allowed or not ? Pl reply.
Thanks in advance
Thanks in advance
25 February 2014
Since an asset is purchased, Section 40A(3) is NOT applicable.
Further, depreciation is NOT a cash expenditure so dep will NOT be disallowed.
Further, depreciation is NOT a cash expenditure so dep will NOT be disallowed.
Message likes :
2 times
25 February 2014
Depreciation is allowed
Sec 40 A(3) will not applicable on purchase of capital asset as it is not revenue expence
.
Cannot disallow depreciation because it is not expence to company but allowance to company for replacement of capital asset
.
So u can avail depreciation
Sec 40 A(3) will not applicable on purchase of capital asset as it is not revenue expence
.
Cannot disallow depreciation because it is not expence to company but allowance to company for replacement of capital asset
.
So u can avail depreciation
Message likes :
2 times
26 February 2014
I defer with the reply.
The provision states....AN ASSESSE INCURS EXPENSES....it does not specify as only revenue exp.....Even capital exp incurred will be disallowed....
Ok
The provision states....AN ASSESSE INCURS EXPENSES....it does not specify as only revenue exp.....Even capital exp incurred will be disallowed....
Ok
26 February 2014
sir the problem is that you never claim the asset purchase as such in the profit & loss account except through depreciation. Therefore it is not disallowed.
26 February 2014
you may also refer to Circular No 34 dated 5 March 1970 wherein it was clarified
" The provisions of section 40A(3) would apply in computing the income under the heads “Profits and gains of business or profession” and “Income from other sources” as per section 58(2). All payments in excess of Rs. 2,500 at one time whether for goods or services obtained for cash or credit, which are deductible in computing the income, have to be made by crossed cheque or bank draft. Thus, the price of goods purchased for resale or use in manufacturing process or payments for services will be covered by the provisions of section 40A(3). However, the section will not apply to repayment of loans or payment towards the purchase price of capital assets such as plant and machinery not for resale."
" The provisions of section 40A(3) would apply in computing the income under the heads “Profits and gains of business or profession” and “Income from other sources” as per section 58(2). All payments in excess of Rs. 2,500 at one time whether for goods or services obtained for cash or credit, which are deductible in computing the income, have to be made by crossed cheque or bank draft. Thus, the price of goods purchased for resale or use in manufacturing process or payments for services will be covered by the provisions of section 40A(3). However, the section will not apply to repayment of loans or payment towards the purchase price of capital assets such as plant and machinery not for resale."
Message likes :
1 times
26 February 2014
Expenditure incurred more than 20k in cash will be considered for disallowace
No matter you repay or incur..
Section 40 A is very clear....
No matter you repay or incur..
Section 40 A is very clear....
26 February 2014
no issues. where will you disallow? for expense to be disallowed, it first needs to be charged against the profits!!
rest I think CBDT has already clarified on the subject long ago..
rest I think CBDT has already clarified on the subject long ago..
26 February 2014
When it is not charged against profits it is not possible to disallow expenditure
Depreciation may be charged to profit and loss account and same cannot be disallowed for non deduction of tds as depreciation is not in nature of expenditure it is an allowance..as per sec 32
.
Depreciation and additional depreciations are mandatory in nature..refer explanation to sec 32
.
.
.
So in my opinion we cannot disallow capital expenditure and also depreciation chrged on it subsequent years
Depreciation may be charged to profit and loss account and same cannot be disallowed for non deduction of tds as depreciation is not in nature of expenditure it is an allowance..as per sec 32
.
Depreciation and additional depreciations are mandatory in nature..refer explanation to sec 32
.
.
.
So in my opinion we cannot disallow capital expenditure and also depreciation chrged on it subsequent years
27 February 2014
Sec.40A(3) clear only but practically
capital asset paid in cash cannot be disallowed u/s 40A(3) as it is not claimed as a deduction under p&l. Further, depreciation on such assets can also not be disallowed u/s 40A(3) as it is not in the nature of ’expenditure’
capital asset paid in cash cannot be disallowed u/s 40A(3) as it is not claimed as a deduction under p&l. Further, depreciation on such assets can also not be disallowed u/s 40A(3) as it is not in the nature of ’expenditure’
27 February 2014
Depreciation is an allowance; not an expenditure.
.
.
An expenditure requires actual outflow of money hence it can't vary. An allowance can vary being in nature to encourage someone to do that activity.
.
(Example : as Standard Deduction was varying previously while computing taxable salary).
.
.
Since depreciation is variable (less than or more than 180 days criteria) hence depreciation is allowable being ALLOWANCE in nature.
.
.
An expenditure requires actual outflow of money hence it can't vary. An allowance can vary being in nature to encourage someone to do that activity.
.
(Example : as Standard Deduction was varying previously while computing taxable salary).
.
.
Since depreciation is variable (less than or more than 180 days criteria) hence depreciation is allowable being ALLOWANCE in nature.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Voluntary gst tax given in DRC FORM 3 US 122 AND US125
- New Time limit for gst assessment for fy 2017-2018,2018-2019,2019-2020,2020-2021
- TDS deposited by party after the filing of income tax returns
- Reg Correction Form 15CB & 15CA
- Rebate u/s 87a on STCG / LTCG - New tax regime
- TDS deduction requirement
- Gstr9 fy23-24
- Salary & Professional Fees at a time from same company
- GSTR9 REGARDING
- Regarding TDS refund u/s 194B & 194G of AY 2024-25
- Specified Time limit for gst assessment for fy 2017-2018,2018-2019,2019-2020,2020-2021
- GST applicability on handling of agricultural produce
- Discount on Tally Renewal
- Pre-deposit @20%- appeal proceedings
- 8C of gstr9
- Regarding the Demand Raised in TAN due to inoperative PAN.
- ITC IN AMMENDED INVOICE IN GSTR9 2023-24
- Unclaimed ITC relates to FY2023-24 reclaimed in October-2024 but failed to reverse the same
- Rule 42 Calculation
- Fixed assets to be expensed out resulting nil value
Trending Online Classes
-
6 days Certification Course on GST Practical Return Filing Process
CA Pratibha Goyal16 December 2024
CAclubindia
