disaalowance u/s 40A(30
PAWAN KUMAR
(Querist) 09 July 2010
This query is : Resolved
1. Whether payments made for purchase of depriciable assets exceeding Rs. 20000/- in cash in one day is dissallowed u/s 40(a)(3) and if yes, whether this is applicable for Asst. Year 2010-2011 also.
2. Whether margin money paid Rs. 100000/-for purchase of depriciable asset (i.e. is of Rs. 5.00 lacs)in cash is dissallowed & balance to be financed from bank etc. and the Dep. Claimed on it is dissallowed on which amoun. (i.e. margin money amount propotionate or full amt. of Dep. and for Asstt. year 2010-11 also.
Kindly clarify.
Vineet
(Expert) 09 July 2010
No disallowance for payment made in cash towards capital expenditure can be made u/s 40A(3). Please check resolved and open queries in this section of last 2 months. This issue has been dealt in detail with the relevant circular.
Kumar Thadhani
(Expert) 09 July 2010
YES i agree with expert Mr.Vineet.
PAWAN KUMAR
(Querist) 10 July 2010
Mr. Viney, i have read your answer for dissallowance u/s 40(A)(3) but in Taxmann ready reckoner 33rd edition for astt. year 2010-11 on page np. A-116 para 49.3-2 sub point 5 depriciation has been disaalowed for purchase of car amounting to Rs. 4.5 lakh.
Please clarify the same and its applicability for asstt. year 2010-11 & further years as mentioned inyour reply circular no. 34 dt. 05/03/1970 (Very old circular)
Thanks
Vineet
(Expert) 11 July 2010
Mr Pawan, the circular is quite old but it has not been superseeded.
The position of law has remained unchanged all along. Please provide me scanned copy of relevant extract you are refering to for clarification. Ready reckoners cannot override law and please let me know if it refers to any specific provision.
By the way, under IT Act the depreciation is allowed on a block of asst and not the individual asset. So how one would identify depreciation to be disallowed in respect of a particular asset for which cash payment was made forming part of this block of asset? it may be simple in numerical examples, in real cases life is not that simple.
PAWAN KUMAR
(Querist) 12 July 2010
Mr. Vinnet I am sending you the scanned copy of Taxmann Ready reckoner 33rd edditon written by Dr. V.K. Singhania. Kindly clarify the same and its applicability for Asst. Years 2010-11 & further years. Point No. 5 clearly mention the applicability of section 40A(3) on depriciables assets.
Thanks
Pawan Kumar
PAWAN KUMAR
(Querist) 20 July 2010
Please clarify the dissallowance of section 40a(3) for depriciable aseets i.e. depriciation on that assets purchased in cash more than Rs. 20000/-. Also find enclosed the scanned copy of page no. A-116 Para 49.3-2 point 5 33rd edition of Dr. V.K. Singhania Taxmann ready reckoner.
soumitra basu
(Expert) 01 August 2010
There can not be any disallowance for purchasing of capital asset. This is been well settled.Depreciation is only an allowance for wear and tear of the asset. It has nothing to do with the purchase of asset. It is impractical. If you claim the asset as revenue expenses then only section 40A (3) attracts.
