All About Tax Audit and Form 3CD (Part-6)

Clause

Particulars

Comments

32

(a)

Details of brought forward loss or depreciation allowance to the extent available

Such amounts need to be revised for any change arising out of a rectification order, assessment order, etc.

(b)

Whether a change in the shareholding of the company has taken place during the previous year due to which the losses incurred prior to the previous year cannot be allowed to be carried forward in terms of section 79.

This provision is applicable to a private limited company with the following exceptions:

Less than 51% of the voting power only has changed hands

Change in shareholding is due to death of a shareholder

Change in shareholding is due to shares gifted by a shareholder to a relative

Where the holding Company is a foreign company and the change in shareholding is due to amalgamation/demerger where less than 51% of the shareholding has changed

(c)

Whether the assessee has incurred any speculation loss referred to in section 73 during the previous year. If yes, please furnish details of the same.

A speculation loss cannot be set off against any income other than a speculation gain. Further, a loss in speculation business will be allowed to be carried forward for only 4 years. This clause keeps the above provisions in check.

(d)

Whether the assessee has incurred any loss referred to in section 73A in respect of any specified business during the previous year, if yes, please furnish details of the same.

(e)

In case of a company, please state whether the company is deemed to be carrying on a speculation business as referred in explanation to section 73, if yes, provide details of speculation loss if any incurred during the previous year.

33

Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, 10AA).

The tax auditor will have to verify whether the assessee has fulfilled the conditions necessary to claim the section-wise deductions.

34

(a)

Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB, if yes, please furnish details

These sections broadly relate to compliances in respect of TDS payable on certain expenses. The tax auditor reports the expenditure on which tax was required to be deducted, whether such tax was actually deducted and paid to the government on time. In case of a failure to comply on time, the details of penalty in respect of such late payments will also be covered.

(b)

Whether the assessee is required to furnish the statement of tax deducted or tax collected. If yes, please furnish the details

(c)

Whether the assessee is liable to pay interest under section 201(1A) or section 206C(7). If yes, please furnish details.

35

(a)

In the case of a trading concern, give quantitative details of principal items of goods traded: (i) Opening Stock; (ii) purchases during the previous year; (iii) sales during the previous year; (iv) closing stock; (v) shortage/excess, if any

The name of the stock item and its unit of measurement would need to be provided

(b)

In the case of a manufacturing concern, give quantitative details of the principal items of raw materials, finished products and by-products: A. Raw Materials: (i) opening stock; (ii) purchases during the previous year; (iii) consumption during the previous year; (iv) sales during the previous year; (v) closing stock; (vi) yield of finished products; (vii) percentage of yield; (viii) shortage/excess, if any. B. Finished products/by-products: (i) opening stock (ii) purchases during the previous year; (iii) quantity manufactured during the previous year; (iv) sales during the previous year; (v) closing stock; (vi) shortage/excess, if any.

36

In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form:- (a) total amount of distributed profits; (b) amount of reduction as referred to in section 115-O (1A)(i); (c) amount of reduction as referred to in section 115-O (1A)(ii); (d) total tax paid thereon; (e) dates of payments with amounts.

Where a domestic company has paid dividend to its shareholders, it is liable to pay dividend distribution tax thereon. This dividend also includes a deemed dividend subject to certain conditions.

36A

a) Whether the assessee has received any amount in the nature of dividend as referred to in sub-clause (e) of clause (22) of section 2? (Yes/No) (b) If yes, please furnish the following details:- (i) Amount received (in Rs.): (ii) Date of receipt

The provisions of deemed dividend are attracted when a private limited company advances an amount to a shareholder (or to a concern in which he has a substantial interest) having more than 10% voting power in the company subject to certain conditions.

37

Whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor.

38

Whether any audit was conducted under the Central Excise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor.

39

Whether any audit was conducted under section 72A of the Finance Act, 1994 in relation to valuation of taxable services, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor.

40

Details regarding turnover, gross profit, etc. for the previous year and preceding previous year: 1. Total turnover 2. Gross profit/turnover 3. Net profit/turnover 4. Stock-in-trade/turnover 5. Material consumed/finished goods produced

Calculation of such ratios would not be applicable for persons engaged in the profession/ service industry.

41

Please furnish details of demand raised or refund issued during the previous year under any tax laws other than Income-tax Act, 1961 and Wealth Tax Act, 1957 alongwith details of relevant proceedings

There are various other legislations like indirect tax, profession tax, etc. that the assessee may be subject to and such acts may have their own authorities to pass a demand or refund order. The details of orders of such authorities need to be provided in this clause.

42

(a)

Whether the assessee is required to furnish a statement in Form No. 61 or Form No. 61A or Form No. 61B? (Yes/No)

The forms mentioned in this clause relate to Specified Financial Transactions where reporting needs to be done in respect of certain prescribed transactions when they are entered into by such assessees as are prescribed in Section 285BA.

(b)

If yes, please furnish Income-tax Department Reporting Entity Identification Number, Type of form, Due date for furnishing, Date of furnishing (if furnished), Whether the form contains information about all details/ transactions which are required to be reported. If not, please furnish list of the details/ transactions which are not reported

43

(a)

Whether the assessee or its parent entity or alternate reporting entity is liable to furnish the report as referred to in sub-section (2) of section 286 (Yes/No)

The report mentioned in this clause relates to providing information in respect of the international group of entities of which the assessee is a part and where the parent entity of such international group is not resident in India.

(b)

If yes, please furnish the following details: (i) Whether report has been furnished by the assessee or its parent entity or an alternate reporting entity (ii) Name of parent entity (iii) Name of alternate reporting entity (if applicable) (iv) Date of furnishing of report

44

Break-up of total expenditure of entities registered or not registered under the GST

This clause attempts to provide a break-up of the total expenditure into various fields that are relevant from the GST point of view like expenditure in relation to exempt goods / services under GST, payments to entities under the Composition Scheme, Payments to entities not registered under GST etc. A similar schedule is available as a part of the Income Tax return forms to be filled up by those not liable for tax audit.