sec 40A (3)

Page no : 4

Naga Praveen (Chartered Accountant) (304 Points)
Replied 09 April 2010

Deepak,

I`m not saying that capital expenditure is disallowed only depreciation will be disallowed if u purchase an asset for more than Rs 20000 in cash.

Upgrade to CAclubindia Pro. Subscribe Now!

Arka Bose (None) (313 Points)
Replied 15 April 2010

what can be the logic behind this? as per section 32 depreciation can be claimed and it says "payment in excess of Rs 20,000 is made(otherwise than by account payee cheque or draft), then deduction under sections 30 to 37 in respect of such payment is not available. " but here i am not paying anything,why it shouldn't be allowed, praveen can you ask respected Mr Singhania to explain a logic behind this?

Naga Praveen (Chartered Accountant) (304 Points)
Replied 16 April 2010

Hey here payment is for purchase of fixed assets and depreciation is just claiming the amount paid for fixed assets as an expense in P&L

Arka Bose (None) (313 Points)
Replied 17 April 2010

i was also thinking the same thing,but it may not be applicable in real life business as the asset purchased should come under block of assets.. u/s32

well it may be applicable if there is only one asset in the block and the depreciation in that case may be(even though i dont support this view) can be disallowed.

i dont support it as we cant take depreciation as deferral in payment as cash expenditure ...

Naga Praveen (Chartered Accountant) (304 Points)
Replied 20 April 2010

Ok yaar but this is my interprertation only

Upgrade to CAclubindia Pro. Subscribe Now!

shubham (CA Final Article) (47 Points)
Replied 01 June 2011

sir

if the company is carrying on construction business and the land purchase for the construction ispartly paid in cash (exceeding 20000),then it would be disallowed or not.....also clear if registry charges paid on it is paid in cash (exceeding 20000) would it be allowed or not