Tax audit and tax return

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2010 A private limited company was incorporated in 3 February 2010 with the authorised and subscribed equity capital of Rs. 70,00,000.

The Company received its equity capital on 15 April 2010.

The company has selected period of 3 February 2010 to 31 March 2011 as it first accounting year.

There were no transaction (income or expense) between 3 Feburary 2010 to 31 March 2010. Does the Company need to file the income tax return for the period ended 31 March 2010 and get it tax accounts audited ?

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

15 September 2010 No. If no substantial work was done upto 31.03.2010 no need to get accounts audited.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
Follow

15 September 2010 Tax Audit is applicable as per section 44AB and in this case it is not applicable.

However ITR is filed as per the provisions of section 139(1). According to me there will be prepaid expenses which are considered under section 35D as on 31-03-2010. As per said section these expenses shall be w/o in 5 years. Accordingly, if there is no income then there will be loss and to carry forward these losses you need to file loss return u/s 139(3).

If there is no prepaid expenses then there is no need to file ITR.

Upgrade to CAclubindia Pro. Subscribe Now!

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

15 September 2010 I think you mean to say preliminary expenses and not prepaid expenses.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
Follow

15 September 2010 Thanks for the correction. Yes, it is preliminary expenses instead of prepaid expenses.

Querist : Anonymous

Querist : Anonymous (Querist)

16 September 2010 Many thanks Aditya and Sudhanshu.

Querist : Anonymous

Querist : Anonymous (Querist)

23 September 2010 I think in this case for not filing income tax return what is more important is the definition of Previous year” which is defined as under:

3. For the purposes of this Act, “previous year” means the financial year immediately preceding the assessment year :

Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.]

Can some body guide as to in case of company when it is asssumed that the business or profession has been set up under income tax ? On incorporation or when the company start busniess i.e. invoicing or incurring expenses ?