Purchase of land in cash

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..... Purchase of land in cash
Query (Issue) Started By: - Ashutosh Chhawchharia Dated:- 21-12-2009 Last Reply Date:- 31-12-2009 Income Tax
Got 4 Replies
Income Tax
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 Reply By DEV KUMAR KOTHARI: The Reply: Whether, land i .....

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..... s 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. Reply By Rama Krishana: The Reply: The provisions of se .....

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..... ction 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. Reply By Nirmalkumar Ojha: The Reply: 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 p .....

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..... ayment more than 20000/- has been made. Reply By DEV KUMAR KOTHARI: The Reply: 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 professi .....

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..... on". 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 invit .....

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..... e 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.
Discussion Forum - Knowledge Sharing .....

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