Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram
Discussions Forum
Home Forum Income Tax This
A Public Forum.
Anyone can participate to share knowledge.
We acknowledge the contributions of Experts/ Authors.

Submit new Issue / Query

Purchase of land in cash, Income Tax

Issue Id: - 1664
Dated: 21-12-2009
By:- Ashutosh Chhawchharia

Purchase of land in cash


  • Contents

If I purchase Land in cash exceeding Rs.20000/-, whether it will be allowed or diasllowed (Payment is made to Non Governmenr persons/bodies). Please refer case laws, if any

Posts / Replies

Showing Replies 1 to 4 of 4 Records

Page: 1


1 Dated: 23-12-2009
By:- DEV KUMAR KOTHARI
Whether, land is stock-in-trade or investment? Why you paid in cash? What were exceptional circumstances to pay in cash? Cash payment in such cases always become a reason for suspected understatement of consideration so avoid them. Case law will not help you unless you know which law is applicable in your case and what are your facts and circumatances.

2 Dated: 23-12-2009
By:- Rama Krishana
The provisions of section 40A(3) are applicable to Business Expenditure. Purchase of capital goods like Land can not be held as Business Expenditure. There for limit of 20000/- is not applicable.

3 Dated: 29-12-2009
By:- Nirmalkumar Ojha
The provisions of section 40A(3) specifically allowows to purchase capital goods in cash if buyer wants buy it in cash. land is capital asset hence can not be inadmissible even if cash payment more than 20000/- has been made.

4 Dated: 31-12-2009
By:- DEV KUMAR KOTHARI
With reference to reply of Mr. Nirmal Kumar I add that as per my understanding( I hope I am not wrong), there is no specific provision to allow 'capital expenses' made in cash u/s 40A (3). Provisions of S.40A have overriding effect, but only in respect of income under the head" profits and gains of business or profession". Therefore, in case a capital asset is eligible for depreciaiton, the A.O. may extend S. 40A (3) and disallow capital cost for the purpose of deprecation allowance. Land is not a depreciable asset, so in problem of querist Mr.Ashutosh Chhawchharia, the provision shall not apply. But who know that in future even 'capital asset', may be considered a stock-in-trade , by assessee, so why to invite unnecessary problems, better pay by A/c payee cheque or A/c payee draft. Payment by A/c payee cheque is always best option, though it may also be disallowed in some circumatances.

Page: 1

Old Query - New Comments are closed.

Quick Updates:Latest Updates