Assessee-firm is\u00a0 engaged in business of real estate development. The\u00a0 assessee purchased land for which certain cash payments were made exceeding Rs. 20,000-Assessing Officer held\u00a0 that land shown as fixed asset in balance sheet was acquired by assessee not for investment but as stock-in-trade for purpose of constructing housing project.\u00a0 Assessing Officer held that cash payment made by assessee was liable to be disallowed under section 40A(3) of the Act. CIT(A) affirmed the order of the Assessing Officer.\u00a0 On appeal the Tribunal held that\u00a0 where land purchase\u00a0 was claimed as investment and formed part of its fixed asset in balance sheet, then merely because assessee was a real estate builder it could not be presumed that said land would be commercially exploited by assessee later for constructing\/developing housing project and such presumption would not trigger applicability of section 40A(3) of the Act. The Tribunal also held that\u00a0 even if there was subsequent conversion or treatment of aforesaid capital asset as a stock-in-trade, provisions of sub-section (2) of section 45 would get triggered, and same would not lead to invocation of section 40A(3) of the Act.\u00a0 (AY. 2015-16)\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 40A(3) :Expenses or payments not deductible-Cash payments exceeding prescribed limits-Real estate developer-Purchase of land as capital asset-Commercially exploited later as stock in trade-Provision of section 40A(3) cannot be applied.[S. 45(2)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-42872","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-b9u","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/42872","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=42872"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/42872\/revisions"}],"predecessor-version":[{"id":42873,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/42872\/revisions\/42873"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=42872"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=42872"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=42872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}