11 March 2009
hi every one i hav a query if an asset is purchased for cash exceeding Rs 20000/- , then sec 40A(3)gets attracted . then whats the penal provision for such as , however , asset purchased will not be allowed as deduction as it will get captalised
11 March 2009
Section 40A(3) is not applicable on Capital Assets purchased. Although one famous writer of Income tax books is of the view that Depreciation on assets may be disallowed which were purchaesed in Cash, but most of the writers do not have this view. Keeping the main provisions of section 40A(3), it can be said that no disallownace can be made on assets purchased in cash.
12 March 2009
The provisions of section 40A(3) would apply in computing the income under the head profits and gains of business or profession and income from other sources under section 58(2) only. Hence purchase of assets in cash for more than Rs 20000/- will not qualify for disallowance u/s 40A(3). Pl refer http://law.incometaxindia.gov.in/TaxmannDit/DispCitation/ShowCit.aspx?fn=http://law.incometaxindia.gov.in/directtaxlaws/cbdt/dtccontents/PARA0379.htm
14 March 2009
Dear Anand, Most of the experts are not of the view of depreciation disallowance, but if any Assessing officer comes with such a view, then it can be matter of appeals.
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