Purchased a Cell Phone worth Rs.25,000 in cash would like to capitalise it.
Is this transaction allowed?? If Yes.
Will the depreciation claim on it will be disallowed.
17 Replies
@*CS Siddharth Bumb. *
(B.Com, CA Final, CS )
(5270 Points)
Replied 30 June 2012
Purchase of fixed assets (for business purpose) in excess of Rs 20000 in cash is allowed...
There will be no disallowance u/s 40(A)(3)...
and depreciation is allowed...
follow the link to clarify your doubt :
1. /experts/fixed-asset-purchase-in-cash--673445.asp#.T-7baxeZZqc
2. /forum/purchase-of-fixed-assets-159650.asp#.T-7bcReZZqc
Rectify me if i am wrong...
Regards,
Siddharth Bumb
sidbumbhelp @ gmail.com
Subhasish Goenka
(-----)
(78 Points)
Replied 30 June 2012
@ Siddharth:- For Fixed Asset (Land) I agree with you as there is no depreciation.
however, For other assets if depreciation is allowed or not I have a doubt.
@*CS Siddharth Bumb. *
(B.Com, CA Final, CS )
(5270 Points)
Replied 30 June 2012
depreciation is allowed...
Subhasish Goenka
(-----)
(78 Points)
Replied 30 June 2012
@ abhinav: me not sure abhinav any clarification or proof on this..
Rupesh Maheshwari
(ACA, Dip. IFR (ACCA))
(6166 Points)
Replied 30 June 2012
| Originally posted by : Abhinav | ||
 |
depreciation is not disallowed. |
 |
depn will be allowed on cell phone if capitalised in books n used for biz purposes
CA sagar satish parab
(service)
(50 Points)
Replied 01 July 2012
as per me purchase of mobile for business purpose can be capitalise & 15 % depreciation will be allowed as per IT Act.
Tanvi
(Practising CA)
(223 Points)
Replied 01 July 2012
depreciation will be allowed...as cash expenses are dissallowed and dep.is not a cash exp.....pur,mb.phone and capitalising it is also not a cash exp..
ashish
(owner)
(21 Points)
Replied 02 July 2012
Sirji i think depreciation is not allowed
there is some case reference for it
for assets paid in cash
SONI BHAVIK
(In Practice)
(49 Points)
Replied 02 July 2012
@ Siddharth, @ Rupesh, @ Sagar, @ Tanvi
SCOPE OF SEC 40A(3)
If payment in excess of Rs. 20,000 is made otherwise than by crossed cheque or draft , then deduction under sections 30 to 37 in respect of such payment is not available. For instance, if any assessee purchases a depriciable asset ( say, a Car ) for Rs. 3 lakh by making payment in cash, depriciation (i.e. 15 per cent of Rs. 3 lakh), which is otherwise deductible, will be disallowed under the provision of section 40A(3).
Karan Chaturvedi
(Consultant - Taxation)
(27 Points)
Replied 02 July 2012
Now, it is settled in the above discussion that the payment made for purchasing an asset in cash exceeding Rs. 20,000/-, can be capitalised in the books and their is no question of disallowance in that P.Y. as the same is not claimed as deduction.
However, deduction of such expenditure is claimed by way of depreciation on yearly basis and whole thrust of discussion is on allowance of depreciation.
With all due respect to the above views, I firmly believe that by plain reading of section 40A(3), what is disallowed is the 'Expenditure' incurred by the assessee for which the payment has been made by way other that by A/C payee Cheque, in aggregate, exceeds Rs. 20,000/-.
However, Depreciation is not an expenditure and it is statutory allowance. The said view has also been supported in the decision delivered by the Special Bench, ITAT, Ahemdabad very recently in the case of Vishnu Anant Mahajan v/s ACIT. And consequentially, Depreciation is not covered under section 40A(3).
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