Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

40A(3)- Fixed Asset

Ramanathan (Article Assistant) (135 Points)

03 September 2007

If an assessee purchase an asset by cash will that expense be disallowed (deprn that he could claim on that asset)?

Is there any recent amendment in 40A(3)?

Reply
Follow
Share

4 Replies

S.RAVICHANDRAN (FINANCE MANAGER) (422 Points)
Replied 03 September 2007

40 A(3) deals with only revenue expenditure which are claimable in the Profit and Loss account. Therefore the cash transactions pertaining to capital expenditure are out of the purview of 40 A(3)

Upgrade to CAclubindia Pro. Subscribe Now!

CA RAJESH GUPTA (CA) (321 Points)
Replied 03 September 2007

sec. 40A(3) clearly deals with expenditure debited to profit oo loss a/c . It does not deal for payment of assets purchased. Further dep is not an expense in strict sense.

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 03 September 2007

The following sub-section (3) shall be substituted for the existing sub-section (3) of section 40A by the Finance Act, 2007, w.e.f. 1-4-2008 : (3)(a) Where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure The words used in the amended section is no deduction shall be allowed in respect of such expenditure .If depreciation , is deduction , in respect of such expenditure , it will be disallowed.