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cash payment

JOSEPH DAVID (GM FINANCE) (286 Points)

28 February 2011

Can a company purchase land by paying cash-party asks the company to pay in cash only the fixed

asset-the land cost is above 1 lakh

thanks in advance

joseph david

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5 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 28 February 2011

Yes you can purchase by paying cash there will be no disallowances because you will treat it as assest

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(Guest)

Originally posted by : Pankaj Arora
	Yes you can purchase by paying cash there will be no disallowances because you will treat it as assest

(Guest)

Originally posted by : Pankaj Arora
	Yes you can purchase by paying cash there will be no disallowances because you will treat it as assest

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 28 February 2011

Probable question of disallowance U/S 40A(3) doesnot arise since its a Capital expenditure.

The company can purchase the same on cash.

sachin sharma (article) (122 Points)
Replied 01 March 2011

Hi joseph,

Sec 40A(3) of income tax is applicable even if an assessee purchases a depreciable assets. For instance, if Mr X purchases a car for business purposes and payment (say, rs. 4.5 lacs) is made in cash, depreciation will be disallowed by virtue of section 40A(3). (ref para 49.3 of ready reckoner point 5)