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

Section 40A(3) disallowance of cash stamp duty challenged where payment made to state government and capitalised. Stamp duty paid in cash for purchase of land was disallowed by the assessing officer under Section 40A(3). The reply contends that payments made to the state government fall outside the cash-payment disallowance and, where the duty is capitalised as part of land acquisition, it represents capital expenditure rather than a deductible business expense.