Here is an interesting question lingering over my head ever since I studied Dr.Vinod K. Singhania's "direct taxes".
Sec.40A(3) states that any payment in excess of Rs.20000 which is otherwise allowable under sections 30 to 37 shall be disallowed if they are made otherwise by an account payee cheque or bank draft.
Section 32 deals with depreciation..
Does it mean that if we purchase a fixed asset for cash, the depreciation on it is disallowed for the entire life of the asset?
When the question was posed to none other than Dr.VKS himself, he said "section 32 very well comes within the range of "30 to 37" and, therefore the disallowance is applicable".
With all due respects to Dr.VKS, is the interpretation correct and if so is the law itself inadvertently drafted in this respect?
CAclubindia
