Tax audit report

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 August 2016 Please clarify with regards to section 40(A)2 what to be reported in Tax Audit report the actual amount paid to relative or expense incurred during the year
Eg expense incurred (salary)and due to relative Rs 240000/- and paid only Rs 200000/

CA Amar Kumar

CA Amar Kumar (Expert)
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28 August 2016 Hi,

Please refer to the extract from the guidance note on Tax Audit relating to the above mentioned topic:

"Particulars of payments made to persons specified under section 40A(2)(b). [Clause 23]
Section 40(A)(2) provides that expenditure for which payment has been or is to be made to certain specified persons listed in the section- Refer Appendix XIII (Page no. 273) may be disallowed if, in the opinion of the Assessing Officer, such expenditure is excessive or unreasonable having regard to:
(i) the fair market value of the goods, services or facilities for which the payment is made; or
(ii) for the legitimate needs of business or profession of the assessee; or
(iii) the benefit derived by or accruing to the assessee from such expenditure. "

The language used is - "payment made or to be made" Therefore, I suggest that you will need to mention Rs. 2,40,000 in the tax audit report.

CA Amar Kumar

CA Amar Kumar (Expert)
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28 August 2016 You can read the guidance note here : http://resource.cdn.icai.org/34728gn-taxaudit-dtcicai.pdf