17 July 2013
Dear Experts Can a C.A be a Tax auditor of a Firm in which his brother's son is the Main partner? As per my Knowledge, according to Chartered Accountants Act, 1949, a professional and practising chartered accountant cannot express an opinion on the financial statements of an enterprise, in which his relatives have a substantial interest unless he discloses such interest in his audit report. But relative as defined by Companies Act excludes Brother's son....
Guest
Guest
(Expert)
18 July 2013
18.07.2013
Dear Sundar,
I will lay emphasis on the words "substantial interest" here. If the nephew holds 51% of the Capital or more, and the controlling interest in the firm vests in him, his uncle who is a practicing CA cannot conduct the tax audit of that firm.
Further, Section 40(A)2 of the Income Tax Act, 1961 clearly mentions "relative" to include spouse, brother or sister, and any lineal ascendant or descendent.
CAclubindia
