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40a(3)

Pratick Datta (-) (71 Points)

11 September 2016

Whether payment regarding capital expenditure in excess of 20,000/- allowed or not ?

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5 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177721 Points)
Replied 11 September 2016

Section 40A(3) deals with expenditure related to Profits & Gains of Business and Profession.

So, Capital expenditure is Not Disallowed.

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Mukesh Kumar (Accounts Manager) (1466 Points)
Replied 11 September 2016

YES

AGREE WITH RAMBHIA SIR

BUT AVAID SUCH AS PAYMENT THROUGH CASH IF POSSIABLE

GOOD LUCK!

CA yogesh jain (job) (53 Points)
Replied 11 September 2016

You can make cash payment in excess of 20000 for capital expenses.as it is not business exp.

shivaji prasad bhimavarapu (CHARTERED ACCOUNTANT) (2391 Points)
Replied 11 September 2016

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.

Dikshit Kapoor (Article Assistant) (51 Points)
Replied 12 September 2016

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)