cash payment stamp duty u/s 40A(3)

[satbir singhwahi]

Stamp duty paid to state govt. for purchase of land , whether covered by rule 6DD(b).. The A.O. has disallowed the stamp duty paid in cash for purchase of land.

[Tax DEPTT]

I think it would be out of the purview of Section 40A (3) as  the payment is being made to State Govt. Moreover, if finally land is to be capitalised in the books of accounts, then it shall not be considered against any expenses. Hence no disallowance under Section 40A(3).

AI Summary

Cash Stamp Duty to State Govt Not Disallowed Under Section 40A(3); Outside Rule 6DD(b) Scope A query was raised regarding whether stamp duty paid in cash to the state government for land purchase falls under Rule 6DD(b) and whether it should be disallowed under Section 40A(3) of the Income Tax Act. The response suggested that such a payment is outside the scope of Section 40A(3) because it is made to the state government. Additionally, if the land is capitalized in the accounts, it should not be treated as an expense, thus not subject to disallowance under this section.