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Clause - 16 Amounts not credited to the profit and loss account, being,-

a. the items falling within the scope of section 28;

b. the proforma credits, drawbacks, refund of duty of customs or excise or service tax, or refund of sales tax or value added tax, where such credits, drawbacks or refunds are admitted as due by the authorities concerned;

c. escalation claims accepted during the previous year;

d. any other item of income;

e. capital receipt, if any.

Under this clause various amounts falling within the scope of section 28 which are not credited to the profit and loss account are to be stated.

Section 28 refers to

the profits and gains of any business or profession,

(i) any compensation received on termination of employment, agency etc.

(ii) ncome derived by a trade, professional or similar association from specific services performed for its members,

(iiia) profits on sale of a licence granted under the Imports Control Order, 1955,

(iiib) cash assistance against exports

(iiic) customs duty or excise repaid or repayable as drawback against exports,

(iiid)profit on the transfer of DEPB Scheme being the Duty Remission Scheme,

(iiie)profit on the transfer of DFRC being the Duty Remission Scheme

the value of any benefit or perquisite arising from business or the exercise of a profession

any interest, salary, bonus, commission or remuneration, by whatever name called, received by a partner of the firm from such firm,

(va)  any sum, whether received for (a) not carrying out any activity in relation to any business (b) not sharing any know how, patent, copyright, trade mark, licence, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services

any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy

any sum received on account of any capital assets (other than land or goodwill or financial instrument) being demolished, destroyed, discarded or transferred if the whole of the expenditure on such capital assets has been allowed under Section 35AD.

Items which are reported in clauses 16(b), (c) and (d) need not be reported in clause 16 (a).

The tax auditor may obtain a management representation in writing from the assessee in respect of all items falling under this clause.

The details of the following claims, if admitted as due by the concerned authorities but not credited to the profit and loss account, are to be stated under sub-clause (b).

a. Pro forma credits

b. Drawback

c. Refund of duty of customs

d. Refund of excise duty

e. Refund of service tax

f. Refund of sales tax or value added tax

There may be practical difficulties in verifying the information in regard to such refunds and credits. It may, therefore, be necessary for the tax auditor to scrutinise the relevant files or subsequent records relating to such refunds while verifying the particulars and also obtain an appropriate management representation.

The words ‘admitted by the concerned authorities’ would mean ‘admitted by the authorities within the relevant previous year’.

Under sub-clause (c), the escalation claims accepted during the previous year but not credited to the profit and loss account are to be stated.

Escalation claims would normally arise pursuant to a contract (including contracts entered into in earlier years)

a. if so permitted by the contract, and

b. other party has signified unconditional acceptance could constitute accepted claims.

Sub-clause (d) covers any other items which the tax auditor considers as an income of the assessee based on his verification of records and other documents and information gathered, but which has not been credited to the profit and loss account. In giving the details under sub-clauses (c) and (d), due regard should be given to AS-9 - Revenue Recognition.

Under sub-clause (e), capital receipt, if any, which has not been credited to the profit and loss account has to be stated.

The tax auditor should use his professional expertise and judgement in determining whether the receipt is capital or revenue.

The tax auditor may record various judicial pronouncements on which he has relied in his working papers.

The following is an illustrative list of capital receipts which, if not credited to the profit and loss account, are to be stated under this sub-clause.

a. Capital subsidy received in the form of Government grants which are in the nature of promoters’ contribution i.e., they are given with reference to the total investment of the undertaking or by way of contribution to its total capital outlay. For e.g. Capital Investment Subsidy Scheme.

b. Government grant in relation to a specific fixed asset where such grant is shown as a deduction from the gross value of the asset by the concern in arriving at its book value.

c. Compensation for surrendering certain rights.

Clause - 17 Where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of a State Government referred to in section 43CA or 50C, please furnish:

Details of property

Consideration received or accrued

Value adopted or assessed or assessable

     

Section 43CA is applicable where the assessee has transferred an asset (other than a capital asset) being land or building or both and the value of such an asset is less than the value adopted or assessed or assessable by any State Government authority for the purpose of payment of stamp duty. In such a case for purpose of computing profit & gains from such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of consideration.

Section 50C is applicable where the assessee has transferred a capital asset being land or building or both and the value of such an asset is less than the value adopted or assessed or assessable by any State Government authority for the purpose of payment of stamp duty. In such a case, for purpose of section 48, the `value so adopted or assessed or assessable by stamp duty authority shall be deemed to be the full value of consideration.

Where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of a State Government referred to in section 43CA or 50C, the auditor is required to furnish the following details:

a. Details of property

b. Consideration received or accrued

c. Value adopted or assessed or assessable

If the assessee has transferred more than one property, the detail of all such properties is required to be mentioned. The auditor should obtain a list of all properties transferred by the assessee during the previous year. He may also verify the same from the statement of profit and loss or balance sheet, as the case may be. Attention is invited to the meaning of the term “transfer” as defined in section 2(47) of the Act.

For reporting the value adopted or assessed or assessable, the auditor should obtain from the assessee a copy of the registered sale deed in case, the property is registered. In case the property is not registered, the auditor may verify relevant documents from relevant authorities or obtain third party expert like lawyer, solicitor representation to satisfy the compliance of section 43CA/ section 50C of the Act.

Clause - 18 Particulars of depreciation allowable as per the Income-tax Act, 1961 in respect of each asset or block of assets, as the case may be, in the following form:-

• Description of asset/block of assets.

• Rate of depreciation.

• Actual cost or written down value, as the case may be.

• Additions/deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of –

• Central Value Added Tax credits claimed and allowed under the Central Excise Rules, 1944, in respect of assets acquired on or after 1st March, 1994,

• change in rate of exchange of currency, and

• subsidy or grant or reimbursement, by whatever name called.

• Depreciation allowable.

• Written down value at the end of the year.

In this regard, tax auditor needs to examine:

• Classification of the asset

• Classification thereof to a block

• The working of actual cost or written down value

• The date of acquisition and the date on which it is put to use

• The applicable rate of depreciation

• The additions / deductions and dates thereof

• Adjustments required – specified as well as on account of sale, etc.

The word “allowable” implies that depreciation should be permissible as a deduction, as per the provisions of the Act and the Rules.

For the purpose of determining the rate of depreciation, the tax auditor has to examine the classification of the assets into various blocks.

If there is any dispute with regard to the classification of an asset in a particular block or the rate of depreciation applied, the tax auditor must give his working with suitable reasons.

It will, therefore, be advisable to put a suitable note with regard to those items in respect of which disputes for the earlier years are not resolved up to the date of giving the audit report and it should be clarified that the amount of depreciation allowable may change as a result of any decision which may be received after the audit report is given. This note can be in the following manner:

“NOTE: Certain disputes about

• the rate of depreciation on ________

• determination of WDV of block of assets relating to ___________ and

•  ownership of ____________ have arisen in the assessment years ___________ for which assessments are pending/appeals are pending. The figures of WDV and/or rate of depreciation mentioned in the above statement may require modification when these disputes are resolved. Therefore, the amount of depreciation allowable as stated in the above statement will have to be accordingly modified.”

The additions/deductions during the year have to be reported, with dates.

Case

To be reported

Addition

Date on which the asset was put to use

Deductions

value of the assets disposed of along with dates

The provisions of Section 36(1)(iii) and Explanation 8 to section 43(1) of the Act, should be kept in mind for capitalization of interest to the cost of assets. The tax auditor should check the working regarding the calculation of depreciation allowable under the Act. To ascertain when the asset has been put to use, the tax auditor could call for basic records like production records/installation details/excise records/service tax records/records relating to power connection for operating the machine and any other relevant evidence.

In the absence of any specific documentation with regard to the effective date from which the asset is put to use, he could get a representation letter from the management, in respect of the assets acquired.

Further, in cases like succession, amalgamation, demerger etc, he should examine whether the apportionment of depreciation has been properly made.

Treatment of VAT Credit on Capital Goods, which are eligible for the credit:

as suggested by The Guidance Note on Accounting for State-level Value Added Tax issued by ICAI

Paragraph 9.1 of Accounting Standard (AS) 10, Accounting for Fixed Assets, issued by the Institute of Chartered Accountants of India, inter-alia, provides as below:

“9.1 The cost of an item of fixed asset comprises its purchase price, including import duties and other nonrefundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. …”

VAT credit is considered to be of the nature of a refundable tax. Therefore, the tax paid on purchase of capital goods should not be included in the cost of such capital goods.

In view of above, the VAT Credit eligible on capital goods should be reduced from the cost of the assets for the purpose of claim of depreciation.

Clause – 19 Amounts admissible under sections:

Section

Amount debited to Profit and Loss Account

Amount admissible as per the provisions of the Income Tax Act, 1961 and also fulfils the conditions, if any, specified under  the relevant provisions of Income Tax Act, 1961 or Income Tax Rules, 1962 or any other guidelines, circulars., issued in this behalf.

32AC

Investment   in   New   Plant   & Machinery

 

33AB

   

33ABA

   

35(1)(i)

   

35(1)(ii)

   

35(1)(iia)

   

35(1)(iii)

   

35(1)(iv)

   

35(2AA)

   

35(2AB)

   

35ABB

   

35AC

   

35AD

   

35CCA

   

35CCB

   

35CCC

   

35CCD

   

35D

   

35DD

   

35DDA

   

35E

   

Explanation

Section & Sub section

Eligible Expenditure/payment

Amount/quantum of deduction

32AC

   

33AB

   

33ABA

   

35(1)(i)

   

35(1)(ii)

   

35(1)(iia)

   

35(1)(iii)

   

35(1)(iv)

   

35(2AA)

   

35(2AB)

   

35ABB

   

35AC

   

35AD

   

35CCA

   

35CCB

   

35CCC

   

35CCD

   

35D

   

35DD

   

35DDA

   

Clause - 20 (a) Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend. [Section 36(1)(ii)].

Details of contributions received from employees for various funds as referred to in section 36(1)(va):

Serial

Nature

Sum

Due

The

The actual

 

number

of

received

date  for

actual

Date

of

 
 

fund

from

payment

amount

payment

 
   

employees

 

paid

to

the

 
         

concerned

 
         

authorities

 
             
               
         

Section 36(1)(ii) provides for deduction of any sum paid to an employee as bonus or commission for services rendered where such sum would not have been payable to him as profit or dividend, if it had not been paid as bonus or commission. In other words, if bonus or commission is in the nature of profit or dividend, it may not be normally allowable as a deduction unless such payment is wholly and exclusively made to the employee. [Shahzada Nand & Sons v. CIT [1977)] 108 ITR 358 (SC).

Under Clause 20(b), the requirement is only in respect of the disclosure of the amount and the tax auditor is not expected to express his opinion about its allowability or otherwise.

The tax auditor should verify the employment/ contract details of the employees so as to ascertain the nature of payments.

Section 36(i)(va) of the Act permits deduction of any sum received by the assessee from any of his employees (like contributions to any provident fund or superannuation fund or ESI Fund or any other Fund for employees’ welfare), if it is credited by the assessee to the account of the employees in the relevant statutory fund on or before the due date.

As per the explanation provided in section 36(1)(va), “due date” means the date by which the assessee is required as an employer to credit an employee’s contribution to the employee’s account in the relevant fund under any Act., rule, order or notification issued there under or under any standing order, award, contract of service or otherwise, i.e., the date by which it is required to be credited as per the provisions of the applicable law etc.

Employees’ P.F. manual provides for 5 days of grace period for payment of contribution. This can be taken into consideration for determining the due date of payment.

The tax auditor should get a list of various contributions recovered from the employees which come within the scope of this clause and the date on which it is deposited.

He should verify the agreement under which employees have to make contributions to provident fund and other welfare funds. The ledger account of contributions from employees should be reviewed; the due dates of payments and the actual dates of payment should be verified with the evidence available.

The tax auditor should maintain the following information in his working papers for the purpose of reporting in the format provided in the e-filing utility:

(a)

Description

Amount

1

2

   

 (b)

Serial

Nature

Sum

Due

The

The actual

number

of

received

date for

actual

date of

 

fund

from

payment

amount

payment

   

employees

 

paid

to the

         

concerned

         

authorities

           

1

2

3

4

5

6

           

Clause – 21

Clause 22- Amount inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006

The tax auditor is required to state the amount of interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006. The Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act) is an Act to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto

An interest payable or paid by the buyer, under or in accordance with the provisions of this Act, shall not for the purposes of the computation of income under the Income-tax Act,1961 be allowed as a deduction

Clause 23 Particulars of payments made to persons specified under section 40A(2)(b)

Section 40(A)(2) provides that expenditure for which payment has been or is to be made to certain specified personsmay 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

ii. For the legitimate needs of business or profession of the assesse

iii. The benefit derived by or accruing to the assessee from such expenditure.

Further, proviso to section 40A(2)(a) provides that no disallowance on account of any expenditure being excessive or unreasonable having regard to the fair market value, shall be made in respect of a specified domestic transaction referred to in section 92BA, if such transaction is at arm’s length price as defined in clause (ii) of section 92F.

Specified Persons

Individual- His relatives

Firm- its partners and their relatives

Association of persons/HUF - it members and their relatives

Company- its directors and their relatives

Clause 24 Amounts deemed to be profits and gains under section 32AC, 33AB or 33ABA or 33AC

Section 32AC allows deduction @ 15% in respect of Investment in new Plant & Machinery to a company who is engaged in the business of manufacture or production of any article or thing and who acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate actual cost of such new assets exceeds 25 crore rupees. The auditor is required to report the deemed income chargeable as profits and gains of business under the circumstances specified in sub sections (2) of section

32AC. The auditor is not required to report any capital gains/losses arising on transfer on the said asset. The tax auditor will be required to verify the compliance to the conditions of the provisions of section 32AC and report the claim of deduction accordingly

Section 33AB allows deduction in respect of Tea Development Account, Coffee Development Account and Rubber Development Account. The auditor is required to report the deemed income chargeable as profits and gains of business

Section 33ABA allows deduction in respect of Site Restoration Fund. The auditor is required to report the deemed income chargeable as profits and gains of business under the circumstances specified in sub sections [5], [7] and [8] of section 33ABA. Where deduction has been claimed with respect to interest credited in Special Account or the Site Restoration

Account, utilization of withdrawal thereof for purposes other than those specified shall be deemed to be income from business

Section 33AC allows deduction in respect of reserve created out of the profit of the assessee engaged in shipping business. The tax auditor is required to report the deemed income chargeable as profits and gains of business for the amount of reserves created on or before 31st March, 2004.

However, consequent to the amendment made by the Finance (No.2) Act, 2004, no deduction shall be allowed under section 33AC for any assessment year commencing on or after 1st day of April, 2005.

Clause 25- Any amount of profit chargeable to tax under section 41 and computation thereof.

Section 41(1) provides that where any allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee and subsequently during any previous year the assessee obtains any amount, whether in cash or in any benefits in respect of trading liability by way of remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him is chargeable to tax as business income.

(ii) Where the assessee who has suffered loss or has incurred expenditure for which deduction has been allowed or by whom the trading liability has been incurred is succeeded in his business either because of amalgamation of companies or demerger or on account of the constitution of new firm or the business if continued by some other person when the

assessee ceases to carry on the business, then the successor in the business will be chargeable to tax on any amount received in respect of such loss, expenditure or trading liability.

Explanation (1) to section 41(1) provides that the expression “loss or expenditure or some benefit in respect of any such trading liability by way of remission or cession thereof” shall include the remission or cession of any liability by a unilateral act of the assesseeor successor in the business by way of writing off such liability in his accounts.

Section 41(2) provides for chargeability to income-tax as income of the business of the previous year in which the moneys payable for the building, machinery, plant or furniture of an undertaking engaged in generation or generation and distribution of power is sold, discarded, demolished or destroyed. Such undertakings are allowed depreciation on such percentage on the actual cost as are prescribed.

Section 41(3) provides that where any capital asset used in scientific

research is sold without having been used for other purposes and the sale proceeds together with the amount of deduction allowed under section 35 exceeds the amount of capital expenditure, such surplus or the amount of deduction allowed, whichever is less, is chargeable to tax as business income in the year in which the sale took place. This is irrespective of whether the business of the assessee is in existence or not during the previous year in which the capital asset is sold.

It may be noted that section 41(3) is applicable only if an asset is sold without having been used for other purposes. In other words, if an asset which is initially purchased for the purpose of scientific research is utilised for business purposes on completion of scientific research and later on is sold or transferred, then section 41(3) is not applicable but in such case section 50 would apply

Section 41(4) provides where any bad debt has been allowed as deduction under section 36(1) (vii) and the amount subsequently recovered on such debt is greater than the difference between the debt and the deduction so allowed, the excess realisation is chargeable to tax as business income of the year in which debt is recovered. For this purpose, it is immaterial whether the business of the assessee is in existence or not during the previous year in which recovery is made

Section 41(4A) provides that if any amount is withdrawn from the special reserve created under section 36(1)(viii), then it will be chargeable to tax in the year in which the amount is withdrawn, regardless of the fact whether the business is in existence in that year or not.

Section 41(5) provides that where the business or profession referred to in section 41 is no longer in existence and there is income chargeable to Tax under sub-section (1), sub-section (3), sub-section (4) or sub-section

(4A) in respect of that business or profession, any loss, not being a loss sustained in speculation business which arose in that business or profession

during the previous year in which it ceased to exist and which could not be set off against any other income of that previous year shall, so far as may be, be set off against the income chargeable to tax under the sub-sections aforesaid. This is irrespective of the number of years that may have elapsed from the year in which the loss has been suffered.

The tax auditor should obtain a list containing all the amounts chargeable under section 41 with the accompanying evidence, correspondence, etc. He should in all relevant cases examine the past records to satisfy himself about the correctness of the information provided by the assessee. The tax auditor has to state the profit chargeable to tax under this section. This information has to be given irrespective of the fact whether the relevant amount has been credited to the profit and loss account or not.

Clause 26

In respect of any sum referred to in clause (a), (b), (c), (d), (e) or (f) of section 43B, the liability for which:-

A. re-existed on the first day of the previous year but was not allowed in the assessment of any preceding previous year and was 

(a) Paid during the previous year;

(b) Not paid during the previous year;

B. was incurred in the previous year and was

(a) Paid on or before the due date for furnishing the return of income of the previous year under section 139(1)

(b) Not paid on or before the aforesaid date.

(State whether sales tax, customs duty, excise duty or any other indirect tax, levy, cess, impost etc. is passed through the profit and loss account.)

In the case of an assessee maintaining its accounts on the mercantile system, the tax auditor should verify the aforesaid particulars of section 43B from the books of account for the year under audit as well as from the books of account, vouchers and documents of the immediately succeeding assessment year as well as return of income for the earlier assessment years so that the information about the aforesaid payments made in the subsequent year can be furnished.

the following amounts shall be allowed as deduction in computing the business income of an assessee in the previous year in which such amounts are actually paid:

(a) any tax, duty (sales tax, value added tax, service tax, excise duty, municipal/property tax, etc.), cess or fee, by whatever name called, payable by the assessee under any law for the time being in force.

(b) any sum payable as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees.

(c) any bonus or commission payable by the assessee to its employees for services rendered, where such sum would not have been payable to him as profits or dividend, if it had not been paid as bonus or commission.

(d) interest on any loan or borrowing from any public financial institution, a state financial corporation or a state industrial investment corporation payable in accordance with the terms and conditions of the agreement governing such loan or borrowing.

(e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advances.

any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee

Clause 27

a. Amount of Central Value Added Tax credits availed of or utilized during the previous year and its treatment in the profit and loss account and treatment of outstanding Central Value Added Tax credits in the accounts.

b. Particulars of income or expenditure of prior period credited or debited to the profit and loss account

The tax auditor should verify that there is a proper reconciliation between balance of CENVAT credit in the accounts and relevant excise and service tax records.

The tax auditor should report the amount of CENVAT availed and utilised under this sub-clause.

In a given case CENVAT availed may be lesser than the CENVAT credit utilised during the year on account of opening balance in CENVAT account or vice-versa and as such it would be advisable, in order to avoid any misleading conclusion and inferences, to report the opening and closing balances of CENVAT.

 Further the sub-clause requires reporting of the credits availed of or utilized during the previous year, it is desirable to report both the credits availed and the credits utilized.

Clause 27(b)

It may be noted that information under this clause would be relevant only in those cases where the assessee follows mercantile system of accounting.

Under cash system of accounting, expenses debited/ income credited to the profit and loss account would be current year’s expenses/income even though they may relate to earlier years.

The tax auditor should obtain the particulars of expenditure or income of any earlier year debited or credited to the profit and loss account of the relevant previous year when mercantile system of accounting is followed. In the case of a person whose accounts of the business or profession have been audited under any other law, the information may be available from annual accounts.

In the case of a person who carries on business or profession but who is not required by or under any other law to get his accounts audited, however, a close scrutiny of the ledger in regard to the period for which expenditure or income is entered in the account books may be necessary.

• Furnish a detail of income/expenditure relating to prior period credited/ debited to the profit and loss account during the year.
• Agree the details with audited schedules and relevant supporting documents.
• Review the items under the head prior period adjustment and the notes to the accounts to ensure all such expenditure/income has been disclosed in the above schedule.
• In order to ascertain the correct meaning of term “Prior Period Item” refer to the text of Accounting Standard- 5 issued by ICAI.
• Obtain management representation.

Clause 28 whether during the previous year the assessee has received any property, being share of a company not being a company in which the public are substantially interested, without consideration or for inadequate consideration as referred to in section 56(2)(viia), if yes, please furnish the details of the same.

Section 56(2)(viia) provides that where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year any property being shares of a company (not being a company in which the public is substantially interested,

i. without consideration, the aggregate fair value of which exceeds rupees fifty thousand, the whole of the aggregate fair market value of such property

ii. For a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration shall be chargeable to income-tax under the head “Income from other sources”

The fair market value of shares means the value determined in accordance with the method prescribed in rule 11UA of the Income-tax Rules, 1962.

The auditor should obtain from the auditee, a list containing the details of shares received, if any, by him from any other company and verify the same from the books of accounts and other relevant documents. Such shares, if received will be reflected in the books of accounts either as investments or as stock in trade.

In case such shares are received without consideration, the same may not be reflected in the books of accounts. Such shares may be verified from the relevant documents such as share certificates issued, if any, demat account statement etc. In either case, the same have to be reported under this clause. Attention is invited to the provisions of section 2(18) which defines the company in which public are substantially interested.

The auditor should maintain the following information in his working

paper file for the purpose of reporting in the format provided in the e-filing

Utility:-

Sr.

No.

Name of the person from whom shares have been received

PAN of the person, if

available

Nature of shares (Quoted in RSE/ Quoted in URSE/ unquoted shares etc

Name of the Company whose shares received

CIN of the company

No. of Shares Received

Fair Market value as per Rule 11UA(1) (c)

Consideration paid

Amount taxable Under section 56(2)(viia) (if the differen ce (e)-(f) exceeds Rs.50,000)

Clause 29 Whether during the previous year the assessee received any consideration for issue of shares which exceeds the fair market value of the shares as referred to in section 56(2)(viib), if yes, please furnish the details of the same.

Section 56(2)(viib) provides that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to income-tax under the head “Income from other sources”.

The provisions of this clause are not applicable where the consideration is received

(a) by a venture capital undertaking from a venture capital company

or a venture capital fund

(b) by a company from a class or classes of persons as may be notified by the Central Government in this behalf

Clause 30 Details of any amount borrowed on hundi or any amount due

thereon (including interest on the amount borrowed) repaid, otherwise than through an account payee cheque. [Section 69D].

• Obtain a schedule of borrowing and repayments (including interest) of hundi loans otherwise than by account payee cheques.
• Agree the details with the audited schedules and relevant supporting documents.
• Obtain management representation.
• Obtain a schedule of borrowing and repayments (including interest) of hundi loans otherwise than by account payee cheques.
• Agree the details with the audited schedules and relevant supporting documents.
• Obtain management representation. 

Note: As per the ICAI in the absence of conclusive or satisfactory evidence a suitable comment in the report as suggested in clause 17(h) shou0ld be made. : As per the ICAI in the absence of conclusive or satisfactory evidence a suitable comment in the report should be made.


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Category Income Tax, Other Articles by - CA Mayank Khatri 



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