meenakshi (Audit Manager) (81 Points)
06 November 2008Hai Friends,
Somebody clarify my doubt. Section 40A(3) of the income tax act disallowes any expenditure for which payment in excess of Rs 20000 is made in cash. Does it apply only to expenses debited in profit and loss account or includes payment made for purchase of fixed assets too. Please reply immediately.
CA Chaitanya
(PRACTISING CA)
(4283 Points)
Replied 06 November 2008
It is not applicable for the capital expenditure payments.
CA. Dashrath Maheshwari
(TaXpert)
(15103 Points)
Replied 06 November 2008
Only operative exp. are covered under this section
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 06 November 2008
Yeah it is applicable on expenditures only and purchase of an asset is not an expenditure
S.Srinivasaraghavan
(Chief Financial Officer and Co)
(11318 Points)
Replied 06 November 2008
In the case of fixed assets how will the assessing officer first of all disallow when it is not coming throgh P&L?
Ramaswamy
(Company Secretary)
(83 Points)
Replied 06 November 2008
| Originally posted by :Shudhanshu | ||
| " | Yeah it is applicable on expenditures only and purchase of an asset is not an expenditure | " |
Please tell me , if payment made for purchase of raw materails by crossed cheque to a supplier - sec 40a(3) is applicable. 20% of payment will be disallowed if it is in excess of 20000/-.
santosh
(consultancy)
(44 Points)
Replied 06 November 2008
| Originally posted by :meenakshi | ||
| " | Hai Friends, Somebody clarify my doubt. Section 40A(3) of the income tax act disallowes any expenditure for which payment in excess of Rs 20000 is made in cash. Does it apply only to expenses debited in profit and loss account or includes payment made for purchase of fixed assets too. Please reply immediately. |
" |
yes its also apply on payment made for purchase of fixed assets as the deprecation on fixed assets is debited in P&L.
Abhishek
(14 Points)
Replied 07 November 2008
going by the earlier provision crossed cheqs wer nt affctd by 40A(3), but recent amendments, trigger 40A(3) in case of payment thru crossed cheques too. As it is possible to encash crossed cheques.
Abhishek
(14 Points)
Replied 07 November 2008
40A(3) shall not apply to depreciation, the same is an allowance that s claimed. It is not an expenditure.
CAclubindia
