Download - Abbas & co. Chartered Accountants CA Abbas Gulamhusainwala.

abbas & co.Chartered Accountants CA Abbas GulamhusainwalaCA Abbas Gulamhusainwala

COVERAGE

Introduction of New clauses in Form 3CA, 3CB and 3CD

Amendment in Existing clauses to Form 3CA, 3CB and 3CD

Deletion of the Existing clauses

AmendmentsAmendments

o Word “for the year ended on 31st March,__________” is replaced with “for the period beginning from __________ to ending on ___________” in case of audited profit and loss account or income and expenditure account.

o Word “as at 31st March,_______” is replaced with “as on________” in case of audited balance sheet. 3CB

o Word “to examination of books of account including other relevant documents” is added to clause 3 of the Form 3CA.

o Word “Signed” is replaces with “Signature and stamp/Seal of the signatory” and Full address is required

o Negative remarks and qualification are needs to reported with reasons.

In case of Books of Accounts to be Audited under any other Act.Form 3CA Form 3CB

o Renumbering of existing clauses.o Addition of 15 New Clauses.o Amendments in 7 Clauses.o Deletion of one clause and ANNEXURE-I related to abstract of balance sheet and

statement of profit and loss.o Item-wise reporting for each clause/sub point, along with: Dates Nature Name Address Description of property etc.o Reporting of obtained Certificates related to specific clauses removed.

Form 3CD

AmendmentsAmendments

Introduction of new clauses:

Clause-4: Disclosure of information for Indirect Tax registration

Whether the assessee is liable to pay indirect tax likeo Excise Duty, oService Tax, oSales Tax, oCustoms Duty, etc.

If yes, furnish the registration number or any other identification number allotted for the same.

Whether the assessee is liable to pay indirect tax likeo Excise Duty, oService Tax, oSales Tax, oCustoms Duty, etc.

If yes, furnish the registration number or any other identification number allotted for the same.

Key point: What is the reporting responsibility of auditor and verification of the liability of the assesseeIf liable for registration and failed to register, still needs to report

Key point: What is the reporting responsibility of auditor and verification of the liability of the assesseeIf liable for registration and failed to register, still needs to report

Clause-8: Applicable provision of section 44AB

(i) Indicate the relevant clause of section 44AB under which the audit has been conducted

a.Business turnover exceeds Rs. 1 Crore

b.Professional receipts exceeds Rs. 25 Lacs

c.Business covered under deeming provisions under o Section 44AE- Business of plying, hiring or leasing goods carriage – not more than

ten – HGV Rs. 5,000 p.m. and LGV Rs. 4,500 p.m.o Section 44BB – Business of exploration, etc of mineral oils – 10% of amount

received by the assessee o Section 44BBB – Business of civil construction, etc,, in certain turnkey power

projects

And the income is claimed to be lower than the profit or gain so deemed.

d.Business covered under section 44AD o And the income is claimed to be lower than the profit and gain so deemed and

income exceeds the maximum amount which is not chargeable to tax

(i) Indicate the relevant clause of section 44AB under which the audit has been conducted

a.Business turnover exceeds Rs. 1 Crore

b.Professional receipts exceeds Rs. 25 Lacs

c.Business covered under deeming provisions under o Section 44AE- Business of plying, hiring or leasing goods carriage – not more than

ten – HGV Rs. 5,000 p.m. and LGV Rs. 4,500 p.m.o Section 44BB – Business of exploration, etc of mineral oils – 10% of amount

received by the assessee o Section 44BBB – Business of civil construction, etc,, in certain turnkey power

projects

And the income is claimed to be lower than the profit or gain so deemed.

d.Business covered under section 44AD o And the income is claimed to be lower than the profit and gain so deemed and

income exceeds the maximum amount which is not chargeable to tax

Clause-17: Transfer of land, building or both – section 43CA/50C of the IT Act

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:

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

Key point: How to report in case of percentage completion reportTransfer under the Act and actual date of transfer by sale deedIf the assessee has filed an appeal for challenging the valuationIf the assets is not a capital asset –section 50C

Key point: How to report in case of percentage completion reportTransfer under the Act and actual date of transfer by sale deedIf the assessee has filed an appeal for challenging the valuationIf the assets is not a capital asset –section 50C

Clause-21(b): Amounts inadmissible under section 40(a)

(i) as payment to non-resident referred to in sub-clause (i)oU/s 40(a)(i): Any interest (not being interest on a loan issued for public subscription before 01.04.1938), royalty, fees for technical services or other sum, which is payable:

A.Outside India; or

B.In India to a Non-Resident, not being a company or to a Foreign CompanyoDetails of payments with full particulars needs to be reported in following two cases:

a.TDS is not deducted

b.TDS is deducted but has not been paid during the P.Y. or in the subsequent year before the expiry of time prescribed u/s 200(1) of the Income Tax Act

(i) as payment to non-resident referred to in sub-clause (i)oU/s 40(a)(i): Any interest (not being interest on a loan issued for public subscription before 01.04.1938), royalty, fees for technical services or other sum, which is payable:

A.Outside India; or

B.In India to a Non-Resident, not being a company or to a Foreign CompanyoDetails of payments with full particulars needs to be reported in following two cases:



Key point: Certain amendment by Finance (No. 2) Act, 2014 applicable w.e.f. 01.04.2015If the assessee has claimed exemption under the treaty

Business Income Vs FTS

Key point: Certain amendment by Finance (No. 2) Act, 2014 applicable w.e.f. 01.04.2015If the assessee has claimed exemption under the treaty

Business Income Vs FTS

Clause-21(b): Amounts inadmissible under section 40(a) (continued…..)

(ii) Under sub-clause (ia)oU/s 40(a)(ia): Any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub contractoro Details of payments with full particulars needs to be reported in following two cases:



(iii) Under sub-clause (ic) [Wherever Applicable]oU/s 40(a)(ic): Any sum paid on account of Fringe Benefit Tax under Chapter XIIH

• Applicable to assessee who pay such tax on demand of Income Tax Department and claim deduction during the previous year.

(ii) Under sub-clause (ia)oU/s 40(a)(ia): Any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub contractoro Details of payments with full particulars needs to be reported in following two cases:



(iii) Under sub-clause (ic) [Wherever Applicable]oU/s 40(a)(ic): Any sum paid on account of Fringe Benefit Tax under Chapter XIIH

• Applicable to assessee who pay such tax on demand of Income Tax Department and claim deduction during the previous year.

(iv) Under sub-clause (iia)oU/s 40(a)(iia): Any sum paid on account of wealth-tax u/s 40a(iia)

• Applicable to Individual, HUF and Company whose Net Wealth exceeds 30 Lakhs.• Reporting of Wealth Tax Assessment details as per New Schema

(v) Under sub-clause (iib)oU/s 40(a)(iib): Any amount paid by way of royalty, license fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on or which is appropriated directly or indirectly from a State Government undertaking by the State Government

• Reporting of details as per New Schema

(iv) Under sub-clause (iia)oU/s 40(a)(iia): Any sum paid on account of wealth-tax u/s 40a(iia)

• Applicable to Individual, HUF and Company whose Net Wealth exceeds 30 Lakhs.• Reporting of Wealth Tax Assessment details as per New Schema

(v) Under sub-clause (iib)oU/s 40(a)(iib): Any amount paid by way of royalty, license fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on or which is appropriated directly or indirectly from a State Government undertaking by the State Government

• Reporting of details as per New Schema


(vi) Under sub-clause (iii)oU/s 40(a)(iii): Any payment which is chargeable under the head “Salaries”, if it is payable outside India or to a non-resident and if tax has not been paid thereon nor deducted there from under Chapter XVII-B.o Applicable in cases where assessee has paid salaries to Non-Resident.o Reporting of details regarding the date of payment, amount of payment and name,

PAN(Optional) and address of the payee.

(vii) Under sub-clause (iv)oU/s 40(a)(iv): Any payment to a provident or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source from any payments made from the fund

(vi) Under sub-clause (iii)oU/s 40(a)(iii): Any payment which is chargeable under the head “Salaries”, if it is payable outside India or to a non-resident and if tax has not been paid thereon nor deducted there from under Chapter XVII-B.o Applicable in cases where assessee has paid salaries to Non-Resident.o Reporting of details regarding the date of payment, amount of payment and name,

PAN(Optional) and address of the payee.

(vii) Under sub-clause (iv)oU/s 40(a)(iv): Any payment to a provident or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source from any payments made from the fund


(viii) Under sub-clause (v)oU/s 40(a)(v): Any tax actually paid by an employer referred to in section 10(10CC), i.e. Tax paid by Employer on perquisite referred u/s 17(2).

(viii) Under sub-clause (v)oU/s 40(a)(v): Any tax actually paid by an employer referred to in section 10(10CC), i.e. Tax paid by Employer on perquisite referred u/s 17(2).


(A) On the basis of the examination of books of account and other relevant documents/evidence, whether the payment referred to in section 40A(3) / 40A(3A) read with rule 6DD were made by account payee cheque\bank draft, If not, please furnish the details of amount deemed to be the profits and gains of business or profession under section 40A(3) / 40A(3A)

(B) U/s 40A(3A): Where an allowance has been made in any year for any expenditure subsequently incurred during P.Y. and makes payment in Cash exceeding Rs. 20,000 or 35,000.

(A) On the basis of the examination of books of account and other relevant documents/evidence, whether the payment referred to in section 40A(3) / 40A(3A) read with rule 6DD were made by account payee cheque\bank draft, If not, please furnish the details of amount deemed to be the profits and gains of business or profession under section 40A(3) / 40A(3A)

(B) U/s 40A(3A): Where an allowance has been made in any year for any expenditure subsequently incurred during P.Y. and makes payment in Cash exceeding Rs. 20,000 or 35,000.

Clause-21(d): Disallowance/deemed income under section 40A(3) / 40A(3A)

Sr. No.

Date of payment

Nature of payment Amount

Name and Permanent Account Number of the payee, if available

Key point: Responsibility of the auditors to unearth such transaction. No need to obtain certificate from the assesseeHow to judge the transaction under Rule 6DD

Key point: Responsibility of the auditors to unearth such transaction. No need to obtain certificate from the assesseeHow to judge the transaction under Rule 6DD

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) of the IT Act, if yes, details of the same to be furnished.oApplicable to Firm and Company (Public are not substantially interested) only.oReceives from any one on or after 01.06.2010 in two modes, subject to certain clauses of Section 47:

a.Without consideration, then Whole Aggregate FMV of such property

b.For a consideration less than Aggregate FMV, then Whole Aggregate FMV minus consideration paid for such property.

Only if, Aggregate FMV is exceeding Rs. 50,000 or consideration less by the amount or more.

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) of the IT Act, if yes, details of the same to be furnished.oApplicable to Firm and Company (Public are not substantially interested) only.oReceives from any one on or after 01.06.2010 in two modes, subject to certain clauses of Section 47:

a.Without consideration, then Whole Aggregate FMV of such property

b.For a consideration less than Aggregate FMV, then Whole Aggregate FMV minus consideration paid for such property.

Only if, Aggregate FMV is exceeding Rs. 50,000 or consideration less by the amount or more.

Clause-28: Property received without/inadequate consideration as referred to in section 56(2)(viia)

Key point: If the Shares have been issued as bonus or right shares Impact of qualification on audit report

Key point: If the Shares have been issued as bonus or right shares Impact of qualification on audit report

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:

oApplicable to Company (Public are not substantially interested) only.oReceives from any resident and Aggregate consideration exceeds the FMV of the Shares, but not apply to Venture Capital Undertaking or Venture Capital Fund.

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:

oApplicable to Company (Public are not substantially interested) only.oReceives from any resident and Aggregate consideration exceeds the FMV of the Shares, but not apply to Venture Capital Undertaking or Venture Capital Fund.

Clause-29: 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),

o Applicable to Assessee involved in Speculative Business activity.o Applicable to Assessee involved in Speculative Business activity.

Clause-32(c): Whether the assessee has incurred any speculation loss referred to in section 73 during the previous year, If yes, please furnish the details of the same.

o Applicable to Assessee involved in Specified Business u/s 35AD i.e. Cold Chain Facility, Hotel of 2 Star or above, Hospital with at least 100 beds, etc “Specified Businesses”.

o Applicable to Assessee involved in Specified Business u/s 35AD i.e. Cold Chain Facility, Hotel of 2 Star or above, Hospital with at least 100 beds, etc “Specified Businesses”.

Clause-32(d): Whether the assessee has incurred any loss referred to in section 73A in respect of any specified business during the previous year, if yes, please furnish details

of the same

Key point: Duty of the auditor to find out the speculative nature of transaction

Key point: Duty of the auditor to find out the speculative nature of transaction

o In case of a company, please state that whether the company is deemed to be carrying on a speculation business as referred in explanation to section 73, if yes, please furnish the details of speculation loss if any incurred during the previous year.

oApplicable to the part of the business of the company consist purchase and sales of shares of other company.

oExcludes o Company having GTI include mainly Interest on Securities, Income from HP,

Capital Gains and Other Income or a company involve in trading of shares. o Banking Company Business of granting of loans and advances.o Trading of shares- Amended in Finance (No.2) Act 2014

o In case of a company, please state that whether the company is deemed to be carrying on a speculation business as referred in explanation to section 73, if yes, please furnish the details of speculation loss if any incurred during the previous year.

oApplicable to the part of the business of the company consist purchase and sales of shares of other company.

oExcludes o Company having GTI include mainly Interest on Securities, Income from HP,

Capital Gains and Other Income or a company involve in trading of shares. o Banking Company Business of granting of loans and advances.o Trading of shares- Amended in Finance (No.2) Act 2014

Clause-32(e):Explanation to section 73

o Whether the assessee is required to deduct or collect tax as per the provision of Chapter XVII-B or Chapter XVII-BB, if yes please furnish:

o Whether the assessee is required to deduct or collect tax as per the provision of Chapter XVII-B or Chapter XVII-BB, if yes please furnish:

Clause-34(a): Detail of TDS compliance

TAN Section Nature of payment

Total amount of payment or receipt of the nature specified in column (3)

Total amount on which tax was required to be deducted or collected out of (4)

1 2 3 4 5

Total amount on which tax deducted or collected at specified rate

Amount of tax collected or deducted out of (6)

Total amount on which tax was deducted or collected at less than specified rate out of (7)

Amount of tax deducted or collected on (8)

Amount of tax deducted or collected not deposited to the credit of CG out of (6) & (8).

6 7 8 9 10

o Whether the assessee has furnished the statement of tax deducted or tax collected within the prescribed time. If not, please furnish the details:

o Whether the assessee has furnished the statement of tax deducted or tax collected within the prescribed time. If not, please furnish the details:

Clause-34(b): Information of furnishing TDS / TCS statements in time

TANType of Form

Due date of furnishing

Date of furnishing, if furnished

Whether the statement of tax collection or deducted contains information about all transactions which are required to be reported

1 2 3 4 5

oWhether the assessee is liable to pay interest under section 201(1A) or section 206C(7) of the IT Act. If yes, furnish the relevant details.

oWhether the assessee is liable to pay interest under section 201(1A) or section 206C(7) of the IT Act. If yes, furnish the relevant details.

Clause-34(c): Information related to liability to pay interest under section 201(1A)/ 206C(7)

TAN

Amount of interest under section 201(1A) / 206C(7) is payable

Amount paid out of column (2) along with date of payment

1 2 3

Key point: Role of Tax Auditor for reporting of Interest along with payment dates.

Key point: Role of Tax Auditor for reporting of Interest along with payment dates.

o In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form:

o Details to be reported includeo Total amount of Distributed profit,o Amount of reduction as referred to in section 115-O(1A)(i) - (domestic subsidiary co)o Amount of reduction as referred to in section 115-O(1A)(iI) - (foreign subsidiary

company taxed at 15% under 115BBD)o Total Tax paid and date of payments with amounts.

o In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form:

o Details to be reported includeo Total amount of Distributed profit,o Amount of reduction as referred to in section 115-O(1A)(i) - (domestic subsidiary co)o Amount of reduction as referred to in section 115-O(1A)(iI) - (foreign subsidiary

company taxed at 15% under 115BBD)o Total Tax paid and date of payments with amounts.

Clause-36: Dividend Distribution Tax under section 115-O

Key point: Role of Tax Auditor to confirm the relationship of holding and subsidiary co. (Holding more than half of the nominal value of the equity shares)

Key point: Role of Tax Auditor to confirm the relationship of holding and subsidiary co. (Holding more than half of the nominal value of the equity shares)

Whether any audit was conducted under section 72A of the Finance Act,1994 in relation to valuation of taxable services. If yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor.oApplicable to Service Provider/Receivers. oIdentification of such disqualification or disagreement.oReporting of details as per New Schema, observations in 500 words.

Whether any audit was conducted under section 72A of the Finance Act,1994 in relation to valuation of taxable services. If yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor.oApplicable to Service Provider/Receivers. oIdentification of such disqualification or disagreement.oReporting of details as per New Schema, observations in 500 words.

Clause-39: Information about Service Tax audit and qualifications

Key point: Role of the tax auditor on the qualification / disagreementCommenting on the work of the other auditor

Key point: Role of the tax auditor on the qualification / disagreementCommenting on the work of the other auditor

Please furnish the details of demand raised or refund issued during the previous year under any tax laws other than Income Tax Act, 1961 and Wealth tax Act, 1957 along with details of relevant proceedingsoDemand or Refund issued by Departments related to Sales Tax/VAT, Excise, Custom, Service Tax needs to reported.o Copy Demand Notice or Refund advice needs to be kept on record for furnishing the details with Tax Audit Report.oDemand or Refund related to Direct Taxes are excluded from the reporting.

Please furnish the details of demand raised or refund issued during the previous year under any tax laws other than Income Tax Act, 1961 and Wealth tax Act, 1957 along with details of relevant proceedingsoDemand or Refund issued by Departments related to Sales Tax/VAT, Excise, Custom, Service Tax needs to reported.o Copy Demand Notice or Refund advice needs to be kept on record for furnishing the details with Tax Audit Report.oDemand or Refund related to Direct Taxes are excluded from the reporting.

Clause-41: Details of any tax demand raised or refund issued

Key point: Documentation of the auditRelevance of the management representation letterScope is increasing more on legal compliance then the Financial audit

Key point: Documentation of the auditRelevance of the management representation letterScope is increasing more on legal compliance then the Financial audit

Amendments to the existing clauses:

List of books of account maintained and the address at which the books of accounts are kept.(In case books of account are maintained in a computer system, mention the books of account generated by such computer system. If the books of accounts are not kept at one location, please furnish the addresses of locations along with the details of books of accounts maintained at each location. )

oLocation of Books of Accounts is additional information sought in this clause.

List of books of account maintained and the address at which the books of accounts are kept.(In case books of account are maintained in a computer system, mention the books of account generated by such computer system. If the books of accounts are not kept at one location, please furnish the addresses of locations along with the details of books of accounts maintained at each location. )

oLocation of Books of Accounts is additional information sought in this clause.

Clause-11(b): List of books of accounts and address

Key point: What is the mean by location of books of accountsRelevance of the management representation letter

Key point: What is the mean by location of books of accountsRelevance of the management representation letter

o Give details of such change and the effect thereof on the profit or losso Give details of such change and the effect thereof on the profit or loss

Clause-13: Change in accounting method

o In case of deviation from the method of valuation prescribed u/s 145A, and the effect thereof on the profit or loss, please furnish:

o In case of deviation from the method of valuation prescribed u/s 145A, and the effect thereof on the profit or loss, please furnish:

Clause-14: Change in valuation of closing stock

Sr. No. ParticularsIncrease in profit (Rs.)

Decrease in profit (Rs.)

Sr. No. ParticularsIncrease in profit (Rs.)

Decrease in profit (Rs.)

Clause-21(a): Amount debited to Profit and Loss account

(i) Please furnish details of amount debited to the profit and loss account, being in the nature of capital, personal, advertisement expenses etc.(i) Please furnish details of amount debited to the profit and loss account, being in the nature of capital, personal, advertisement expenses etc.

Nature Serial number

Particulars Amount in Rs.

Expenditure incurred at club being cost of club service and facility being used

Expenditure by way of penalty or fine for the violation of law for the time being in force

Expenditure by way of any other penalty or fine not covered above

Expenditure incurred for any purpose which is an offence or which is prohibited by law.

o Section-wise details of deductions and admissible under Chapter III (section 10A, section 10AA of the IT Act) are added to clause.

o Section-wise details of deductions and admissible under Chapter III (section 10A, section 10AA of the IT Act) are added to clause.

Clause-33: Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, Section 10AA)

Section under which deduction is claimed

Amount admissible as per provision of the Income-tax Act, 1961 and fulfils the conditions, if any, specified under the relevant provisions of Income-tax Act, 1961 or Income-tax Rules,1962 or any other guideline, circular etc. issued in this behalf

o U/s 10A: In case of Newly established undertaking in Free Trade Zone involved in manufacturing or produce of computer software :

100% deduction of Profit & Gains for computing Total Income of the Undertaking for 10 Consecutive Assessment Year.

o U/s 10AA: In case of unit of entrepreneur referred u/s 2(j) of Special Economic Zones Act, 2005 involved in manufacturing, producing articles or providing services on or after 01.04.2006:

100% deduction of Profit & Gains derived from export for 5 Consecutive Assessment Year.

50% deduction of Profit & Gains derived from export for further 5 Assessment Year

o U/s 10A: In case of Newly established undertaking in Free Trade Zone involved in manufacturing or produce of computer software :

100% deduction of Profit & Gains for computing Total Income of the Undertaking for 10 Consecutive Assessment Year.

o U/s 10AA: In case of unit of entrepreneur referred u/s 2(j) of Special Economic Zones Act, 2005 involved in manufacturing, producing articles or providing services on or after 01.04.2006:

100% deduction of Profit & Gains derived from export for 5 Consecutive Assessment Year.

50% deduction of Profit & Gains derived from export for further 5 Assessment Year

Clause-33: Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, Section 10AA) (Continued…)

Key point: Separate audit report is required in certain casesIn case of difference of opinion by the auditors

Key point: Separate audit report is required in certain casesIn case of difference of opinion by the auditors

Whether any cost audit is carried out, if yes, give the details if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor:

oInstead of submitting Cost Auditor Report, now this clause requires submission of disagreement on any matter/item/value/quantity as reported/identified by the cost auditor.oMandatory in the case of the Companies which are required to be audited by the Cost Auditor under the provision of the Companies Act, 2013.oCopy of Cost Audit must be obtained even in case of voluntary cost audit carried out by the assessee.oComplete verification of such report for reporting of disqualification or disagreement reported by Cost Auditor.

Whether any cost audit is carried out, if yes, give the details if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor:

oInstead of submitting Cost Auditor Report, now this clause requires submission of disagreement on any matter/item/value/quantity as reported/identified by the cost auditor.oMandatory in the case of the Companies which are required to be audited by the Cost Auditor under the provision of the Companies Act, 2013.oCopy of Cost Audit must be obtained even in case of voluntary cost audit carried out by the assessee.oComplete verification of such report for reporting of disqualification or disagreement reported by Cost Auditor.

Clause-37: Cost Auditor Report

Whether any audit conducted under the Central Excise Act, 1944, if yes, give details, if any, of disqualification or disagreement on any mater/item/value/quantity as may be reported /identified by the auditor:

oInstead of submitting Cost Auditor Report, now this clause requires submission of disagreement on any matter/item/value/quantity as reported/identified by the cost auditor.oCopy of Cost Audit must be obtained and reported disqualification or disagreement needs further reported in Tax Audit Report even in case of voluntary cost audit carried out by the assessee.oComplete verification of such report for reporting of disqualification or disagreement reported by Cost Auditor.

Whether any audit conducted under the Central Excise Act, 1944, if yes, give details, if any, of disqualification or disagreement on any mater/item/value/quantity as may be reported /identified by the auditor:

oInstead of submitting Cost Auditor Report, now this clause requires submission of disagreement on any matter/item/value/quantity as reported/identified by the cost auditor.oCopy of Cost Audit must be obtained and reported disqualification or disagreement needs further reported in Tax Audit Report even in case of voluntary cost audit carried out by the assessee.oComplete verification of such report for reporting of disqualification or disagreement reported by Cost Auditor.

Clause-38: Central Excise Report

Details regarding turnover, gross profit, etc., for the previous year and preceding previous year:

oReporting of ratios pertains to preceding previous year is now added in this clause.oEven ratios of the unaudited books of accounts needs to reported in case of business/profession existed in previous year.oTax Audit Report or books of accounts, needs to verified for report such ratio as applicable to the asseesee.

Details regarding turnover, gross profit, etc., for the previous year and preceding previous year:

oReporting of ratios pertains to preceding previous year is now added in this clause.oEven ratios of the unaudited books of accounts needs to reported in case of business/profession existed in previous year.oTax Audit Report or books of accounts, needs to verified for report such ratio as applicable to the asseesee.

Clause-40: Details regarding turnover, gross profit, etc

Sr. No. Particulars Previous Year Preceding P.Y.

1 Total turnover of the assessee

2 Gross Profit / Turnover

3 Net Profit / Turnover

4 Stock-in-trade / Turnover

5 Material Consumed / Finished Goods

Deleted Clauses:

o Old Clause 17(h)(a): whether a certificate has been obtained from the assessee regarding payments relating to any expenditure covered under section 40A(3) that the payments were made by account payee cheques drawn on a bank or account payee bank draft, as the case may be.

o Old Clause 24(a)(c): Whether a certificate has been obtained from the assessee regarding taking or accepting loan or deposit, or repayment of the same through an account payee cheque or an account payee bank draft.

o In New Form 3CD, there is no reporting requirement of obtaining any certificates from the client.

o Old Clause 17(h)(a): whether a certificate has been obtained from the assessee regarding payments relating to any expenditure covered under section 40A(3) that the payments were made by account payee cheques drawn on a bank or account payee bank draft, as the case may be.

o Old Clause 24(a)(c): Whether a certificate has been obtained from the assessee regarding taking or accepting loan or deposit, or repayment of the same through an account payee cheque or an account payee bank draft.

o In New Form 3CD, there is no reporting requirement of obtaining any certificates from the client.

Reporting requirement in case of whether Certificated obtained in the respective clauses has been removed:

Form 3CA/ 3CBQualificationsQualifications

Qualification Remarks

All the information and explanations which to the best of my/our knowledge and belief were necessary for the purpose of my/our audit has not been provided by the assessee.

Amount of expense related to exempt income u/s 14A of Income-tax Act, 1961 could not be ascertained.

Creditors under Micro, Small and Medium Enterprises Development Act, 2006 are not ascertainable.

The information regarding applicability of MSMED Act, 2006 to the various suppliers/parties is not available with the assessee, hence information as required vide Clause 22 of Chapter V of MSMED Act, 2006 is not been given.

Documents necessary to verify the reportable transaction were not made available.

Fair market value of shares u/s56 (2) (viia)/(viib) is not ascertainable.

GP ratio is not ascertainable from the financial statements prepared by the assessee.


Prior period expenses are not ascertainable from books of account.

Proper books of account, to enable reporting in form 3CD, have not been maintained by the assessee.

Proper stock records are not maintained by the assessee.

As explained to us, it is not possible to maintain stock record.

Records necessary to verify personal nature of expenses not maintained by the assessee.

Yield/percentage of wastage is not ascertainable.


Records produced for verification of payments through account payee cheque were not sufficient.

The assessee has not made any payments exceeding the limit in section 40A(3)/269SS/269T in Cash. However, it is not possible for us to verify whether the payments in excess the specified limit in section 40A(3) /269SS/269T have been made otherwise than by crossed cheque or bank draft, as the necessary evidence are not in possession of the assessee.

Reports of audits carried by Excise/Service tax Department were not made available.

TDS returns could not be verified with the books of account.

Valuation of closing stock is not possible

Valuation has been taken as certified by the partner.


The detailed information is required to provide under the new format

The report is to be submitted on line with the specified schema. Notes are not uploaded in the report.

Certain verification needs audit of the auditors who may or may not be CA

The primary responsibility to compile the information for the verification is of the management

Audit more of legal compliance then the financial analysis

The detailed information is required to provide under the new format

The report is to be submitted on line with the specified schema. Notes are not uploaded in the report.

Certain verification needs audit of the auditors who may or may not be CA

The primary responsibility to compile the information for the verification is of the management

Audit more of legal compliance then the financial analysis

Challenges

Matching Concept: Unclaimed TDS/TCS of earlier year can be claimed in current year

Questions??????

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14 September 2014

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