if a payment for purchase of fixed asset is made in cash and the amount of payment exceeds Rs 20,000/- what would be the consequences?
eg computer purchased for Rs 49000/- by paying cash.
Thankx in advance :)
17 Replies
Akash
(CA Final Article Assistant)
(1671 Points)
Replied 17 September 2013
It will be disallowed u/s 40 a(3)
CA Ramsai N
(Fresher)
(594 Points)
Replied 17 September 2013
Sec 40A(3) will applicable to the payments in revenue nature. Payments made for purchase of F.A does n not attracts Sec 40A(3) disallowance.
One can claim Depreciation as will on purchased assets U/s 32 of IT
abhishek
(CA FINAL)
(274 Points)
Replied 17 September 2013
Thank you Ramsai :)
Can the depreciation be disaalowed ??
abhishek
(CA FINAL)
(274 Points)
Replied 17 September 2013
hi Manish
thanks for your reply
i have a doubt, is depreciation not a revenue expenditure?
parasmani pal
(study)
(33 Points)
Replied 17 September 2013
It is.
But computer is not revenue nature.
When it is allowed to make a FA in cash above 20k.
Then its depreciation is also allowed to dr in p&l.
CA Mitesh N Kothari
(9821662799)
(391 Points)
Replied 17 September 2013
Ramsai Neelam is Right since it is capital expenditure and not revenue expenditure it wont be disallowed.
CA Ramsai N
(Fresher)
(594 Points)
Replied 17 September 2013
| Originally posted by : abhishek | ||
 |
Thank you Ramsai :) Can the depreciation be disaalowed ?? |
 |
Depreciation can be allowed as usually.
Depreciation is a revenue nature, but Computers on which you expended can't be endured during the year, i.e the benefit can taken over several years.
Govind Singh
(Accountant)
(23 Points)
Replied 17 September 2013
If there is so much dispute its better not to purchase in cash
Siddhartha
(Student Audit Assistant)
(272 Points)
Replied 17 September 2013
Section 40A(3) does not apply for purchase of fixed assets. Hence nothing will be disallowed u/s 40A(3). And you can claim depreciation on the actual cost of the asset as per Sec.43(1)
CA Pallav Singhania
(IT System Auditor)
(33567 Points)
Replied 17 September 2013
No, it is not applicable on Purchase of fixed assets or any other depreciable assets.
Section 40A(3) : expenditure ( other than capital assets) incurred in excess of 20000 not by an A/c payee cheque or bank draft in respect of which a payment/ aggregate of payment made to a person in a day shall not be allowed to be reduced as expense while calculating PGBP income.
No Dis-allowance can be made in respect of Depreciation...
''Janta Metal Supply Co. v/s CIT (1991) 100 CTR (All.) 52''
Manideep E
(Student)
(24 Points)
Replied 18 September 2013
Depreciation is an Allowance and not Revenue expenditure.
Since in Sec.32 it is worded as Depreciation allowance and not Depreciation expenditure
Kindly correct me if I am wrong...
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