Please Help: Allowability under Sec 40A3
Posted Date : 25-Aug-2011 , 07:52:43 pm | Posted By CASANSAAR
Ib bike Purchased in cash for Rs 48000.00 it is disallowed u/s 4A3.It can be allowed bcz we had purchase a Capital Asset.Or it istotaly disallowed..???
Category : Students | Answers : 2 | Comments : 3 | Hits : 1098
Answers
Answer By: CA Manzurhasan J Shaikh
Dear Arjun,
The provisions of Sec 40A(3) are applicable to Revenue Expenditures only. It is not applicable to Capital items. Hence you can capitalize & depreciate the bike provided the same has been used for business or professional purpose only.
The provisions of Sec 40A(3) are applicable to Revenue Expenditures only. It is not applicable to Capital items. Hence you can capitalize & depreciate the bike provided the same has been used for business or professional purpose only.
Answer By: Ketan Samdani
As regards the purchase of asset there will not be any effect of sec 40(A)(3) but the resultant depreciation shall be disallowed as the asset is purchased by violating sec. 40(A)(3).
Comments
sashi
25-Aug-2011 , 10:17:35 pmIt is allowed u/s 40A3.
Ashish Karundia
25-Aug-2011 , 11:52:31 pmDear Arjun, Section 40A(3) of the Income Tax Act deals with expenditure and not fixed assets. Rs 48,000 incurred on purchase of bike has to treated as fixed asset and therefore the same needs to be capitalised. However, it may be noted that depreciation on the same can be claimed.
CA VIPIN GARG
26-Aug-2011 , 10:02:29 amYes definitely it can be capitalised and there is no question of applicability of sec 40A3 because it relates only to expenditure portion and you can also very well claim the depreciation on that as well.