11 October 2012
This is a question from Practice Manual, can any one give more clarity for this answer
XYZ Private Limited is engaged in the wholesale business of buying and selling silk sarees. The accounts are maintained under the Companies Act from 1st October to 30th September each year. The Chief Accountant of the Company is requesting the tax auditor to conduct tax audit U/S 44AB of the I.T. Act for the period for which accounts have been maintained under the Companies Act. As the tax auditor of XYZ Private Limited, how will you react to the Chief Accountant’s request?
11 October 2012
Sec 3(1) Save as otherwise provided in this section, "previous year" for the purposes of this Act, means the financial year immediately preceding the assessment year.
Sec 2(9) "assessment year" means the period of twelve months commencing on the 1st day of April every year .
Therefore in Income Tax Act F Y is always start from 1st apr.
Therefore Audit u/s 44AB is to be done for the F Y only.
11 October 2012
Income tax recognises only one financial year. Tax audit is done as per the norms of income tax and hence it should cover the period starting from 1st April and ending on 31st MArch of the folowing year.
CAclubindia
