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Section 145a of it act for tax audit

ABHINANDAN JAIN (CA Student) (886 Points)

15 September 2011

Can anyone pls tell me the provision of section 145A of I T Act for tax audit Tax Audit.

Pls explain those provision also

How to calculate valuation as per section 145A of It ACT,1961

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Prakash (Chartered Accountant) (560 Points)
Replied 15 September 2011

As per Sec 145A the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head “Profits and gains of business or profession” shall be—

(i) in accordance with the method of accounting regularly employed by the assessee; and

(ii) further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation.

Explanation.—For the purposes of this section*, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment;

Means We have to present the puchases Value including any taxes paid like VAT, sales tax, import duties etc and Sales should also be inclusive of Taxes collected. Generally when we follow accounting Standards those tax payments should not be considered in profit and loss account, treated in Balance sheet. But here by this section they are asking us to present purchases and Sales Inclusive of taxes

Further the valuation of inventory also should be done inclusive of taxes, Ofcourse we do that normally, but the problem is generally we exclude input taxes claimed for out taxes

But here they are asking us to Value the inventory irrespective of any right arising as a consequence of such payment of taxes. Means we should value inventory including all taxes paid whether or not we claimed them under CENVAT rules

May be they made this rule in order make comparability of statutory compliances, like Sales Tax department may validate the figure mentioned on ITR in any Scrutiny.

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