Section 40A(3) deals with expenditure related to Profits & Gains of Business and Profession.
So, Capital expenditure is Not Disallowed.
YES
AGREE WITH RAMBHIA SIR
BUT AVAID SUCH AS PAYMENT THROUGH CASH IF POSSIABLE
GOOD LUCK!
You can make cash payment in excess of 20000 for capital expenses.as it is not business exp.
There is different opinion by Dr Vinid K Singhania in his professional edition of Direct Taxes. Depreciation can not be claimed on fixed assets purchased in Cash if such capital expenditure is more than Rs20,000/-.
However, for future transactions always avoid cash payments in excess of Rs20,000/- even for Capital expenditure.
It has been clarified through a board circular issued by CBDT that Purchase Of fixed assets by cash will not be subject to disallowance under section 40A(3) but Installation of fixed asset expenses will be subject to disallowance under 40A(3)
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