Tds on provision for expenses

Very good question, Shivendra.

My opinion would be, in such  a case, do not make any provision for tax audit fees in FY 11-12 for which tax audit and return filing was by 30 September 2012.

Instead debit the fees in FY 12-13 for tax audit of FY 11-12 (but that would contravene section 44AB) and let it be prior period expenditure in 3CD of FY 12-13.

Do not add back the amount for income computation of FY 12-13 and if it falls under scrutiny explain the scenario to AO.

But again, without deciding the tax auditor (CA / CA firm) how can you upload the ITR for FY 11-12 by 30 September 12.

Your case is exposed to non compliances and penalty from various angles.

Let us know your thoughts.

Regards,

Originally posted by : Dipjyoti Majumdar
	Very good question, Shivendra. My opinion would be, in such  a case, do not make any provision for tax audit fees in FY 11-12 for which tax audit and return filing was by 30 September 2012. Instead debit the fees in FY 12-13 for tax audit of FY 11-12 (but that would contravene section 44AB) and let it be prior period expenditure in 3CD of FY 12-13. Do not add back the amount for income computation of FY 12-13 and if it falls under scrutiny explain the scenario to AO. But again, without deciding the tax auditor (CA / CA firm) how can you upload the ITR for FY 11-12 by 30 September 12. Your case is exposed to non compliances and penalty from various angles. Let us know your thoughts. Regards,

Madam,

The real triology lies here itself, The assessee has to file its TDS return on 15th May he has time between 15 may to 30th sept. for auditing its account.

Therefore return can be filed well before 30th sept. But the appointment after filing od TDS return would make a problem.

Morover, treating it prior period expense every year in my opinion would not be accurate. Morover it woould contravene mercantile accounting and would be required to reported by CA which according me is not correct as there is no fault of assessee.

Acording to me the provions of inocme Tax should be made clear by department by way of explanatory notes

Your point is well noted.

You can file revised quarterly TDS return for 4th quarter any time, but , there will be problem if amount of tax audit fee is not freezed.

Keeping the fee not more than 30,000 might be another option as then 194J will not apply.

But the summary is the individual assessee falling under tax audit should appoint a Tax auditor with agreed fee before 15th May of calendar year.

Thanks,

Madam,

you are trying to avoid liability or making your assessee pay interest being no fault on their part. however its just an example and their may be situation where it may impossible to avoid such situation. 

I wanted to know the provision regarding such cases.