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Form 3CD-Sec.43B-Tax

19 January 2008

Hi,

Kindly let me know whether tax auditor has to report about particulars of cess,tax,duty,fees or whatever statutory in nature U/s.43B (a), not being paid before specified date, even if the same has not been passed through P&L A/c and not claimed for deduction in computing taxable income.

Ex: Entries regarding Service tax collection and disbursements to govt. routed thru' separate "Service Tax Payable Account" and the balance is being disclosed in B/s directly. (a proprietary concern)

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Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 19 January 2008

Accounting entries can not determine thenature of transactions..........rather nature of transactions determine the accouting entries. In law substance is more important than form. RELEVANCE OF ACCOUNT ENTRIES - IF INCOME DOES NOT RESULT AT ALL , THERE CANNOT BE A TAX , EVEN THOUGH IN BOOK-KEEPING AN ENTRY IS MADE ABOUT A' HYPOTHETICAL INCOME' WHICH DOES NOT MATERIALISE. WHERE INCOME HAS IN FACT BEEN RECEIVED AND IS SUBSEQUENT GIVEN UP IN SUCH CIRCUMSTANCES THAT IT REMAINS THE INCOME OF THE RECIPIENT, EVEN THOUGH GIVEN UP, THE TAX MAY BE PAYABLE. WHERE, HOWEVER, THE INCOME , CAN BE SAID NOT TO HAVE RESULTED AT ALL , THERE IS OBVIOUSLY NEITHER ACCRUAL NOT RECEIPT OF INCOME, EVEN THOUGH AN ENTRY TO THAT EFFECT MIGHT IN CERTAIN CIRCUMSTANCES HAVE BEEN MADE IN THE BOOKS OF ACCOUNT - CIT VS. SHOORJI VALLABHDAS & CO.[SC] RELEVANCE OF BOOK ENTRIES - IT IS NOW WELL- SETTLED THAT THE WAY IN WHICH ENTRIES ARE MADE BY AN ASSESSEE IN HIS BOOKS OF ACOUNT IS NOT DETERMINATIVE OF THE QUESTION WHETHER THE ASSESSEE HAD EARNED ANY PROFIT OR SUFFERED ANY LOSS. SUTLEJ COTTON MILLS VS. CIT

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(Guest)

Dear Sathish, Pls note that Only Statutory Auditor has to report the same under CARO, as required by Sec. 227 (4A) of the Cos. Act, 1956. As far as Tax Auditor is concerned, he is required to report in the Form No. 3CD as to whether or not the same has been deposit in accordance with the specified time because the deduction is allowed only on the payment basis.