26 June 2011
Which audit report you are taking about? Tax audit or some other. There is no such section in Income Tax Act as mentioned by you. IF you are talking about companies Act, the same should be properly disclosed in the notes to the accounts as books of accounts may not be prepared on going concern basis as the company is in the process of winding up.
If the same is not shown in notes to the accounts, auditor should qualify the report or mention the facts in his audit report.
I had referred audit reports of certain listed companies, when i got this doubt and understood that in few cases it is mentioned as follows: 'Since the Central Government has till date not prescribed the amount of cess payable under Section 441A of the Act, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same' In some reports there is no specific mention in this regard and along with other duties it is said that the Company is regular in depositing cess.
27 June 2011
and more over.. is that a cess at 5% ?? have heard some such rates for it. and being it be a Section under Companies act, i assume that audit reports of all companies should state the same.
28 June 2011
The following is the extract of Companies Act, 1956.
441A. Levy and collection of cess on turnover or gross receipts of companies.—
(1) There shall be levied and collected, for the purposes of rehabilitation or revival or protection of assets of the sick industrial company, a levy by way of cess at such rate not less than 0.005 per cent. and not more than 0.1 per cent. on the value of annual turnover of every company or its annual gross receipt, whichever is more as the Central Government may, from time to time, specify by notification in the Official Gazette.
(2) Every company shall pay to the Central Government the cess referred to in sub-section (1) within three months from the close of every financial year.
(3) Every company shall furnish, in such form as may be prescribed, to the Central Government and the Tribunal the details of its turnover and gross receipts with payment of cess under sub-section (1).
(4) The Central Government may, by rules made in this behalf, specify the manner in which the cess shall be paid under sub-section (2)
One view is that, In CARO, the word 'Cess' is used in general and there is no specific mention that it is the cess u/s 441A of the Companies act. Cess is paid under Other acts also say Excise act and customs act. Though such cess is excise duty and customs duty as per the relevant acts, it is meant to be used for purposes other than the basic excise and customs duty. Hence considering that the Company has deposited cess under excise and customs act. It can be mentioned that Company is regular in depositing cess (like it is mentioned for other duties) and no specific mention needs to be made to Section 441A of the Companies Act.
Other view is as i have mentioned in my earlier reply, specifically referring to the 441A of the Companies Act.
I think in both cases Auditor cannot be held for misconduct, as it can be interpretted either ways and followed eitherways across the country.
CAclubindia
