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Fixed asset purchased in cash

Online Query (CA Final Student) (120 Points)

03 September 2020

what is the treatment of adjustment:- if fixed asset puchased in cash under the head PGBP?

1) payment up to 10,000 in cash
2) payment more that 10,000 in cash

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6 Replies

sabyasachi mukherjee (27107 Points)
Replied 03 September 2020

It is recommended not to apply cash in fixed asset.

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Online Query (CA Final Student) (120 Points)
Replied 03 September 2020

Thanks, I know but what is the treatment after that?

sabyasachi mukherjee (27107 Points)
Replied 03 September 2020

Fixed asset is a capital expenditure.
capitalize the cost.
enter it in fixed asset register and charge depreciation as per the rates applicable in schedule 3.
avail credit for gst as input igst or cgst as the case may be.

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 03 September 2020

1. Payment up to 10,000 in Cash, capitalised and claim depreciation.
2. Payment more than 10,000 in cash _ can't claim depreciation u/s 32 and and can't add cash amount in cost of fixed assets as per section 43 of IT act, 1961

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Aman Verma (209 Points)
Replied 03 September 2020

For 1 st case normally apply depreciation in 2 nd case it is disallowed to pay more than 10000 in cash in single transaction if is possible to bifurcate the amount than do that otherwise ypu wont be able to claim dep on that amount

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sabyasachi mukherjee (27107 Points)
Replied 04 September 2020

I am quite aware of the relevant sections SEC 40 A (3).
Disallowance of expenditure in respect of expenses incurred for fixed asset .
Like claiming depreciation benefit while computing income from business and profession is not asked for.
It's a wide subject.