Hi Ayush,

My view is "this question is asking about legal solution of illegal practise".-Thats not possible

Because

As a auditor we have to complete audit befor filling of return. and u are saying that we start audit in  aug-sept of A.Y. That time is not for start to audit. But that is for we have to complete audit.

Now some point:

In case of proprietorship: generally they not required audit due to less turnover/presumptive basis. yes even there are cases of audit. but 99% fees are pre decided and fees is less than the limit for the requirement of tds.

In case of listed companies question doesnot arise because due to qurterly audit fees generally agreed till april.

In case of others(including unlisted cos., pat. firm ):

if fees less than limit, then no problem.

but in case of requirement of tds.

practise as far as my knowledge is: generally till last date of filling of tds return both parties generally agreed to a particular amount for Audit fees. for the same after considering the payment till march, party make provison.....deposit tds, ca claim tds for the same amount.

But generally fees are not equal to agreed amount. now both parties treat the rest amount as the item of next year..mean deduct tds in next year, claim tds in next year. Client can enter those amount simply as exps of next year( if we go to legal way, we can entered as prior period items)

Originally posted by : CA. JAIN
	Hi Ayush, My view is "this question is asking about legal solution of illegal practise".-Thats not possible Because As a auditor we have to complete audit befor filling of return. and u are saying that we start audit in  aug-sept of A.Y. That time is not for start to audit. But that is for we have to complete audit. Now some point: In case of proprietorship: generally they not required audit due to less turnover/presumptive basis. yes even there are cases of audit. but 99% fees are pre decided and fees is less than the limit for the requirement of tds. In case of listed companies question doesnot arise because due to qurterly audit fees generally agreed till april. In case of others(including unlisted cos., pat. firm ): if fees less than limit, then no problem. but in case of requirement of tds. practise as far as my knowledge is: generally till last date of filling of tds return both parties generally agreed to a particular amount for Audit fees. for the same after considering the payment till march, party make provison.....deposit tds, ca claim tds for the same amount. But generally fees are not equal to agreed amount. now both parties treat the rest amount as the item of next year..mean deduct tds in next year, claim tds in next year. Client can enter those amount simply as exps of next year( if we go to legal way, we can entered as prior period items)

Nicely illustrated the practical scenario, Thanks Jain.

Till Now, I Think The Best Replies Were From Ashish Kukreja & Then CA Jain.

What You Says Other Participants......

Dear Ayush.

An Auditor is normally being appointed at the A.G.M. Therefore, the Company should obtain a written certificate from the Auditor that the re-appointment, if made, will be in accordance with the limits specified in Section 224(1B).

and yes i agree with you that audit generaly started at the month of aug and sept of pvt ltd and firms and fee also decided at the time of audit only.

but my Q is why pvt ltd revised his tds return. CA raise his invoice on the month of sep when he complite his audit. He can not issue back dated invoice.

so there is no Q arises for revise return and interest.

you are a CA and think practicaly your Q is not as per the law.

completely agrred with CA Jain sir..

Dear Sirs,

Usually we used to provide only provision entry for audit fees during our finalisation ( As on 31st March of the relevant year) . That is

Audit Fees A/c Dr            XXX

  To Audit Fees Payable A/c       XXX

Here we are crediting to the account of expense payable only and not to the account of payee.

But the provisions of TDS mandates us to deduct TDS only when such sum is credited to the account of payee or at the time of payment.

So, when bill is issued by auditor during next year, the audit fees payable is reversed with the payee account and TDS is deducted.

This reduces the confusion for our clients as well us for us.

They deduct TDS at the time of receipt of bill and audit firm could also easily claim that TDS for next assessment year.

Hi meenakshi,

if we credit to outstanding exps, then we can do each entry relating to tds through outstanding account...due to this intention of law will go to end. So by adopting this practise tds deduction liability will come only in case of payment,,,thats not right.

And one more thing crediting to outstanding exps can be treated as credited to suspense account.

Generally financial statements are not ready by 31/03/2012 and in few cases not even by sep' 2012.....so there is a time gap between the preparation of financial statements and audit....and in most of the cases audit starts during april or may and the client come to know abt auditor by march 31 in most cases... so most companies create provision for audit fees... as audit fees is decided during the engagement itself.. so tds provision  can be made for audit fees by the year end it self.

however if the client do not know abt audit or auditor up to the date of audit.. then the problem arise as he will not be create any provision as of 31/03/2012.. in that case  he need to make a provision and then pay tds along with interest...

in few cases we do face the problem of getting tds returns after filing the income tax returns...