|



 
Taxing Audit(or) !!...
 Profits and Gains of Business or Profession
Tax audit report signed on or after 10-8-á006 whether in respect of AY á006-07 or
earlier AYs should be in the revised format.
Annexure-less IT return regime Vs. Tax Audit Report.
Turnover Vs. AS-7
Accountant   
  |  
! "  #
Tax consultants may be tax auditor.
CA writing / maintaining books of the assessee/any partner of such CA / the
firm in whom such CA is a partner should not accept tax audit assignment.
If a relative of a director is appointed as tax auditor of a company, such
appointment attracts the provisions of S. 314 of the Companies Act. This is
because tax auditor is an ¶office of profit· for the purposes of S. 314.
If a CA gives a tax audit report for a concern in which he or his relatives is
substantially interested, the interest must be disclosed in his report.
Tax audit of a firm of CAs cannot be done by any partner / employee of the
firm

á of 5á Taxing Time for Tax Audit ² CA K.G.Acharya

Chargeability U/S. á8

Profits from business or profession V


Compensation on termination of a contract of managing agency / vesting in
the Government / management of any property or business V

Trade / professional association Income from services for its members. [S. á8(iii)]
Profits on sale of REP license/ Exim scrip, Cash Assistance, Duty Drawback of
customs or excise against exports V
 
  
Profit on transfer of DEPB Scheme or DFRC V
  
Perquisite arising from business or in exercise of a profession V

Interest, salary, bonus, commission or remuneration of a partner of a firm V

w

  

      
  
   V
   
 
w

  

   
 
    

   ! V

Income under an agreement for not carrying activity V

Amount received from Keyman Insurance Policy referred to u/s 10(10D)V


3 of 5á Profits and Gains of Business or Profession Taxing Time for Tax Audit ² CA K.G.Acharya
Chargeability U/S. á8

Loss, expenditure or trading liability allowed as deduction earlier and

subsequently received or remission or cessation of the liability.
Liability unilaterally written off in the accounts is deemed as remission or
cessation of liability V
 


Profits on sale of a capital asset for scientific research which was allowed U/s
35 earlier V


Bad debts allowed u/s 36(1)(vii) in an earlier year. V


K
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*(
 +
,

-! (     
 


   
   
 .!

4 of 5á Profits and Gains of Business or Profession Taxing Time for Tax Audit ² CA K.G.Acharya
Expenses Deductible

Rent, rates, taxes, repairs (excluding capex) & insurance of buildings V

Repairs (excluding capex) and insurance of P&M and furniture V

Depreciation ²
Additional Depreciation @ á0% -New P&M used for manufacture.
Assets used for < 180 days depreciation restricted to 50%.
Business of growing and manufacturing tea or coffee or rubber = Deduction
lower of Amount deposited in Tea/Coffee/Rubber Development Account or
40% of its profits from business V

Expenditure on scientific research related to business, (including capex less
land cost) V
  
1á5% of amount paid to approved scientific research association, university,
college or other institution for scientific research / research in social science
or statistical research.V
  

5 of 5á Profits and Gains of Business or Profession Taxing Time for Tax Audit ² CA K.G.Acharya

ss Dtil

á5 of sum aid to a ational la oratory or a ni ersity or an IIT ith a s ecific

direction that it shall e used for scientific research under a rogram a ro ed
in this ehalf y the rescri ed authority V
  
Com any in usiness of io-technology or manufacture of drugs,
harmaceuticals, electronic e ui ments, com uters, telecommunication
e ui ments, chemicals or other notified articles. eduction u to á5 of
ex enditure incurred (u to . .á
á) on scientific research (excluding land or
uilding) / on in-house facility V
 
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  isiti  ri t t 
r t tl i ti sr is ll
 s
ti r t  lis
ri V
 T   ti ll
 /s 2

itr fr
r ti t  si l   i
lf r r 
lift t f t 

li
i t , l l t rit r 

r ssi ti. 
ifi
rts
il rii
tr
rts i rr l r s  r  sl s, strti f

lli its r sls fr t ,
rts f -ti l 
r
l sr f r sst s, ris,
li i
s, r s,
r ti
f s
rts,
llti trl, t. V
  

itr 
 t t ssi ti  istitti fr  rri t rr l
l
t
rr s r t tifi rr l l
t f, r t
 ti l r  rt r i ti F. V
 

6 of 5á rfits  G is f Bsiss r rfssi Taxing Time for Tax Audit ² CA K.G.Acharya
Expenses Deductible

Preliminary expenses - Deductible in 5 EYI upto a max of 5% of COP or capital

employed.
Expenditure upto 31.3.1998 allowable in 10 EMI upto a maximum of á.5% of COP or capital employed. V

Expenditure incurred on amalgamation or demerger in 5 EYI V
 
VRS Expenditure allowable in 5 EYI V
 
Deduction for expenditure on prospecting, etc., for certain minerals V

Insurance premium for stocks or stores. V
!
Insurance premium paid on employees health by any mode other than Cash
to GIC or any other insurer and approved by IRDA. V
!

Bonus or commission to employees, irrespective of the limit under the Payment
of Bonus Act. V
!
Interest on borrowed capital. V
!
Interest paid on borrowing for acquisition of new asset for extension of existing business or
profession from the date of borrowing till the date on which such asset is first put to use, shall not
be deductible.
Provident and superannuation fund contribution. V
!  " #  
Approved gratuity fund contributions. V
!  " 
Sum received from employees and credited to their account in the relevant
fund before due date. V
!
7 of 5á Profits and Gains of Business or Profession Taxing Time for Tax Audit ² CA K.G.Acharya
Expenses Deductible

Loss on death or becoming permanently useless of animals. V
!

Bad debt actually written off (Excluding provision for bad debts). V
!
Family planning expenditure. V
!
Contributions towards Exchange Risk Administration Fund set up by PFI [S. 36(1)(x)]
BCTT V
!
Expenditure (Other than Capex or personal or for a purpose which is an offence or
is prohibited by law) incurred in furtherance of trade. V
#
Following expenditures can also be claimed u/s 37(1), $  %%   $ %&' % ($

" ""  " (& ($  %"( (% & & % )
Entertainment expenditure.
Expenditure on presentation articles,
Expenditure on advertisement outside India, incurred in foreign currency,
Travelling expenditure,
Expenditure on maintenance of guest house.

8 of 5á Profits and Gains of Business or Profession Taxing Time for Tax Audit ² CA K.G.Acharya
Expenses NOT Deductible

Payment of salary to working partner subect to specified limits and interest on capital
* + to partners - authorized by partnership deed V


1. Partnership deed will not have retrospective effect.
á. Deduction for remuneration shall not be allowed unless the partnership deed either specifies
the amount of remuneration payable to each individual working partner or lays down the
manner of quantifying such remuneration.
Expenses deductible on actual payment only- 
Provision made for payment of contribution to an approved gratuity fund, or for
payment of gratuity payable during the year. V
#
Advertisement in any souvenir, brochure, etc. of political party. V
#

Interest, royalty, fees for technical services or other sums payable outside India
or to NRI, foreign company in India on which TDS is not made or not deposited
within the time limit. V

Salaries payable outside India or to a non-resident on which TDS is not paid or
deducted V

Interest, commission or brokerage, rent, royalty, fees for professional or technical
services to resident on which TDS is not deducted or paid within the due date.

Ö       
   

    
  !
 
"
  #
 
 
 
 V
$%


9 of 5á Profits and Gains of Business or Profession Taxing Time for Tax Audit ² CA K.G.Acharya
Expenses NOT Deductible

STT V


FBT V

Tax on profits/ gains of business/ profession V

Wealth Tax V

Payment to a PF or other fund established for employees benefit, unless
proper arrangements of TDS on any taxable payment out of such fund are
made V

Income Tax paid by employer on Perquisites of employee V

Interest, salary, bonus, commission or remuneration made by AOP/BOI to its
members.
Expenditure > Rs. á0,000 paid otherwise than by account payee cheque/
bank draft (Exception Rule 6DD) V

Where deduction is claimed on accrual basis and payment (exceeding Rs. á0,000) is made in a
subsequent year, the payment shall be deemed as profit of the assessee for the year in which the
payment is made. Upto A.Y.á007-08, the income was being recomputed and rectification was made
u/s154

10 of 5á Profits and Gains of Business or Profession Taxing Time for Tax Audit ² CA K.G.Acharya
Expenses NOT Deductible

Annual listing fee paid to stock exchange.

Expenditure incurred by way of stamp paper, underwriting commission,
registration fees, lawyer fees etc., for raising debenture issue.
Initial expenditure on installation of fluorescent light.
Expenses on defending any proceedings for breach of any law relating to
sales tax.

11 of 5á Profits and Gains of Business or Profession Taxing Time for Tax Audit ² CA K.G.Acharya
 Form No. 3CD - Part A

1. Name of the assessee

á. Address
3. Permanent Account Number
4. Status
´Statusµ refers to assessee-status-i.e.
Individual/HUF/Firm/Company/AOP/BOI/AJP

5. Previous year ended

6. Assessment year

1á of 5á Taxing Time for Tax Audit ² CA K.G.Acharya

 Form No. 3CD - Part B
7 (a) If firm or Association of Persons, indicate names of partners/members
and their, profit sharing ratios.
! w
     % 
 
    
  

 % 
  
 

 
   % 
 
  
   %

Clause 7(a)
No need to furnish remuneration or interest to partners. [Para 18.1]

Clause 7(b)
The word ´particularsµ includes the date/s of change/s also. Dates of
changes in salary to partners are also to be mentioned.
Admitting a minor to the benefits of partnership is also a ¶change in the
partners·.

13 of 5á Taxing Time for Tax Audit ² CA K.G.Acharya

 8
! K
         
       
  %
     
         !

(b) If there is any change in the nature of business or profession the particulars
of such change.

Change after the balance sheet date should be ignored.

Instances of change in business or profession that is to be reported

14 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
 9.
a. Whether books of account are prescribed u/s 44AA, if yes, list of books
so prescribed.
b. Books of account maintained , "
(( " ($ ( & %
*&    (* & % "-"& * * &( &'
(( " ($ ( &
.  %& 
- " ' (* & % "-"& *

c. List of books of account examined.

CBDT has prescribed books of account only for specified professionals

Accountancy Information Technology

Architectural Interior decoration
Authorized representative Legal
Company secretary Medical
Engineering Technical consultancy
Film artist

|" ""  "$

15 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
Books of Account to be maintained
Ä (     w// gross receipts > Rs.1,50,000
Cash book , Journal, Ledger;
|%
( ( " ($ bills and receipts " %-  *
%  /' % " *  "
"

Original bills and receipts $(% 
 %%  (% /' % " '
"  %  &"
% (& ""   &'  & %  %%  0 "
 -* & ( ' %"
% %   ". 
- &'  %"(  "" &' "'
(( (&"
 1 & %& %"  % " & ($ &'  & % 2
For medical profession, %& $%(* &' 
(
(( "  - " % ."& % 
3(%* 4(
|    &(%- ($ "&( ($ % ." *  " &
"'( 

*& 
[Rule 6F]
By Businessmen and other professionals (not specified above):
 ,(* 5 "

 6" (%

 7(& " " & %( % (% .%("" %  & 5 "
 6
No account books have been prescribed by CBDT in case of above.

Besides, where an assessee is covered 89


3
 (%

 & he claims his income is lower than that computed under the respective
Sections, he shall compulsory maintain the aforesaid books of account.

Penalty for failure to maintain account books, 9"
# - Rs. á5,000.

16 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
 
:' &' % &' %($&  ("" ( &   " - ;%($&"  ."
"" ""
 ( % " *&
"" $ - " & &' *( &  &'
%  & " &(   3     (% - (&' %
%  & " &(


S. 44AD: Civil contractor

+ ($ .%("" %  &" (% - '.' % *( & V4 $ .%("" %  &" 5 "
 

S 44E: Business of Plying, hiring or leasing goods carriages

"
  ;< $(% ' - .(("  '  "
 ;< $(% (&' %  ' " (%
- '.' % *( & V4 $ "" "" (/" 5  .((" %%. " - &*
 %. ;=

S 44AF:Retail Business
+ ($ 7 %>( % (% - '.' % *( & V4 $ .%("" %  &" 5 "
 "

S 44BBB:Foreign cos. Engaged in the Business of civil Construction, etc.,in

certain turnkey Power proects
 + ($ *( & $(% " $  && "

17 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
 

 < &'( ($ ( &. *(-   &' % ( " - %


 :' &' % &' % '
 - '.  * &'( ($ ( &. *(- 
">>" &' * &'( *(-   &' ** & - %  . % ( " - %

 ,$ "/ % &( 
 
( "  &' $$%*& .  &" ($ " ' '.
 &' $$ & &' % ($ ( &' %($& (% (""

 &" ($  &( $ -  &' * &'( ($ ( &. *(-   &'

% ( " - % $%(* ( &. "&%" % "%
  % " &( 
 &' $$ & &' % ($ ( &' %($& (% (""

18 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
Clause 11(a)
ethod of Accounting ² [ % 
%  "

Clause 11()
? 
>
%
% "" "" "    % 

$ 
 $%

" 

%
% ë
ë

|l s

()
4 $$   %
$
  %
$
% 
""@ % $ %" 
 $$ 
  %
$
% 
"" "
 %   6 9
,
" 
 % $ % 
 $$ 
  




> "
"%
$    
 
 /  
 % 
%
 % "    
  % " "

|l s

()

  % % "  "" "" " 


 /   
$ 9"  

, > , > "
"%
$ 
 
 " 
, >,, > "
"%
$ %
%  %

"  %
% % 
" 
 "  
 
 "

19 of 5á Form No. 3|D ² P rt B Taxing Time for Tax Audit ² CA K.G.Acharya



 < &'( ($  &( ($ (". "&( *(-   &' % ( " - %


 &" ($  &( $ - $%(* &' * &'( ($  &( % "%
 9" 
 &' $$ & &' % ($ ( &' %($& (% (""


A B A&' A$((/.A%& %"A($A&' A&A"" &A( %& A&(A
"&( C>&% )>
AA

& '&
"&(

AA& '& 


(
AA) & '& 


(
AA ! &&
&&&
& &
 & *


Clause 1á(a):
Õ/A*& %AC &A("&)A
3"' A.(("AC &A("&A(%A4Õ A/''  %A"A(/ %

á0 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
COST
|("& ($  &(% " "'(    ("& ($  %'" ("& ($ ( %"(   ("&
 %%  &(
%. &'  &(% " &( &' % % " & (&(  (&(

|("& ($ ( %"( &(   $  $&(%- ( %' " "( 


"(%&( ("&.

""
% & ("&. *%. ("&. (% %
 ("&.
"" " (& (/ 

|("& ($  &(% " ($ & *" &'& % (& (%%- & %'. 
  .((" (%
" % " %(    " .% .&  $(% " $  +  "  
, 
(  
 
 ' 



"  
D(/  % /'  &' % % %.
 *
% ($ & *" ($  &(%- /'' % (%%- & %'. 
 " $
 &$&( ($ ("&" " %(%& "  " ' % *"& "  & %%"
(  (
& %  & %*  $$ &" ( &'  & %($& (% ("" $(% &'  %(
-
"  &.  %& % * &'( ($ &' " %&. &' & *" &'& % * 
 &(% "

7' ("& ($  &(% " (&' % &' &'(" " $  
( "'( 
"". 
-
". &' FIFO or weighted average ("& $(%* 

á1 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
NET RELISABLE VALUE: (NRV)
4Õ "'( 
"&*&  & '
 "' & &

"&*& " ($ 4Õ "'(  & &( (" %&( $ & &(" ($ % (% ("&
% &- % &. &(  &" ( %%. $& % &' 9 & &( &' & & &'& " '
 &" ($%* &' (&(" "&. & &' 9 &

"&*& ($ 4Õ >      
> "&*& " ($ 4Õ * "& "( &
&( (" %&( &'  %(" $(% /'' &'  &(%- " ' 
3(% * &'
4Õ ($ &' 1 &&- ($  &(%- '  &( "&"$- $%* " " (% " % (&%&" "

"  ( &' (&%& %

"&*& ($ 4Õ >   ," ""
, 
> ,$ &' " " (&%&" % $(%
 "" &' &'  &(%- 1 && " '  &' 4Õ ($ &'  ""  &(%- "
"  (
.  % " . % "

COMPARISON BETWEEN COST AND NRV:

,& *>
->& *
"" (% ( .%(  ($ "*% (% % &  & *"
""
Aggregate
comparison is not permissible

áá of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
Clause 1á(b)


4(&/&'"&. -&'. &( &' (&%%- (&  
 &' valuation ($
 %'"  " ($ .(("   &(%- $(% &'  %(" " ($  & %*. &'
(* '%. 
  % &' '  E;B;F "'
>

 (% /&' &' * &'( ($ ( &. % . %- *(- 
- &' "" "" )


$ %&' % G "&  &( include the amount of any tax, duty, cess or fee 
- /'&  %
*   & -  (%  %% 
- &' "" "" &(
%. &' .((" &( &'
 ($ &" (&(  (&( " ( &' & ($  &(

Clause 1áA:

7' %& %" ($  "  ' &(
$ %"'  /&' % $ %  &( &' % ( "
- %  /'' &' & "" & /" ( %&  &( "&( >>&%


7'( .' &'  %(" ($ % (%&. " .   / &' %("(" ($
 &' &
 &(% " (& % 1 %  &( (* & &( *% &  & .
" "" %($& &


D '" &( "(" &' & ($ 1 "&( ($ "" &  ("& 1 "&(


D '" &( % (%& &' *( & & /'' &' "" & " ( %&  &( "&( >>&% "
 %
(( " ($ ( &
,$ &' ( %"(  " & &'
((  ($ "" & ' '"
&( % (%& &' $&  % &'"  "

á3 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
13. Amounts not credited to the profit and loss account, being, -
 &' & *" $. /&' &' "( ($ " &( 2


 &' %($(%* % &" %/
 " % $  ($  &- ($  "&(*" (% " (%
service tax, or refund of sales tax or value added tax /' % " ' % &"
%/
 " (% % $ " % *&&  " 
- &'  &'(%& " ( % 2

 "&( *"  &   %. &' % ( " - %2

 - (&' % & * ($ (* 2

  & %  & $ -

Clause 13:

> " 
   / (& - &(  "" "" $((/. &' "'
""
($ ( &.

(%. &( ,|, ,$ &'  && % *&&. &' *( & " &  "- >>#
 %   
- &' "" "" ( >># & " E*&& 
- &'  &'(%& "
/&' &' % ( " - %F

á4 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya

;%& %" ($  % &( (/
 "  % &' ,(* >& & H! 
% " & ($ ' "" & (%
( ($ "" &" " &' " *-
 &' $((/.
$(%* )>
 "%&( ($ "" &9
( ($ "" &"

 Õ& ($  % &(
 &  ("& ($ /%&&  (/  " &' " *-

 &("9  &("  %. &' - % /&' & "2  &' " ($ - &( ($  "" &
&  & &( " 2  . G "&* &" ( ( & ($) <($     7 % &
*   (/   % &' | &% " %  " H  % " & ($ "" &" 1 % 
( (% $& % "& <%' HH
(i) change in rate of exchange of currency, and
(ii) subsidy or grant or reimbursement, by whatever name called
  % &( (/

$ :%&&  (/  & &'  ($ &' - %

á5 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
Applicability of clause 14 -
Õ%01 
 00-!!! .
 0 
 00-!!


  % " & ($ tangible assets 
 (- $(% plant and machinery & *" excluding
(buildings, machinery, plant and furniture) &' $((/.)
and intangible assets. '"  %%$&"

<' %-9 & "&   - ($$
% *" "9% " & (**(&(  &' & %
($ . "& '( "

$$  "9%( &%"(%&  ' "

- &9*' %- /'(" + ($ &  ("& '"

 (/  "   &(


  % " & ($ new as well as 
 (-  % " & ($ new item.
second-hand items
Õ& " /
prescribed % on WDV Õ& " á0% of actual cost $ 1 %   "&  ( (%
V"  %
 % "%
 + ($ &  $& % >>  + ($ 1 %   "&  ( (%
("& $& % >>
&
$(% >>


 &( all assesses %("" &'
(% 
 (- &( "" "" " /'( manufacture or produce
articles/things

Assessee will be allowed depreciation *
irrespective of whether he claims it or not.
Is additional depreciation available to an assessee engaged in production of computer software?

á6 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya

*( &" *""
  % " &(" C
  |   | || ||     

 
&  &( &' %($&  ("" ( & "'(/. &' *( & 
&  
  &( (/
  % ' " &( " %& -2


 (& 
&  &( &' %($&  ("" ( &

!
 - " *  &(  *(- "
( " (% (**""( $(% " % " %  % 
/' % " ' " * /" (&' %/" -
 &( '* " %($&" (%  
V &(
!


 - " * %    $%(* *(- " &(/%" (&%
&(" &( - %( &
$  (% "  % &( $  (% - (&' % $  * &(   " &( 2
  & $(% -* &  &' &  & ($ -* & &( &'
( %   &'(%& " 9" ! 

á7 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
17. Amounts debited to the profit and loss account, being :-
(a) expenditure of capital nature;
(b) expenditure of personal nature;
(c) expenditure on advertisement in any souvenir, brochure, tract, pamphlet or the like,
published by a political party;
(d) expenditure incurred at clubs, -
(i) as entrance fees and subscriptions
(ii) as cost for club services and facilities used
(e) (i) expenditure by way of penalty or fine for violation of any law for the time being in
force;
(i) any other penalty or fine:
(ii) expenditure incurred for any purpose which is an offence or which is prohibited
by law;
(f) amounts inadmissible under section 40(a);
(g) Interest, salary, bonus, commission or remuneration inadmissible under section
40(b)/40(ba) and computation thereof;
(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
(B) amount inadmissible under section 40A(3), read with rule 6DD [with break-up of
inadmissible amounts]
(i) provision for payment of gratuity not allowable under section 40A(7);
(j) any sum paid by the assessee as an employer not allowable under section 40A(9);
(k) particulars of any liability of a contingent nature
(l) amount of deduction inadmissible in terms of section 14A in respect of the expenditure
incurred in relation to income which does not form part of the total income;
(m) amount inadmissible under the proviso to section 36(1)(iii);
á8 of 5á Ö
 

 Taxing Time for Tax Audit ² CA K.G.Acharya
Clause 17(b)
The specified % of FBT expenses are deemed to represent an element of personal
benefit to the employees and not to the assessee.
7' "&  ($ &'& %& &. ( " (&   ""%- %   &'  "&- ($
&'
" ""  %(" "

The word ¶personal· is confined to and attached with the assessee. ,& ( " (&
  ""%- &  &(  %"(" (&' % &' &' "" "" 
.
*(- "

Clause 17 (c)
 & %  %%   
"'.  &
  /" % (% *.I (% G( %

"' 
-  (& %&-   (&
"("   % &'"  "
"  ( &'
%  ($ E G " * .  %"F  % & %% &&( ($ "&& "
- /'' &' /(%" E(% &'  F
 %. &'  " /   ""%- ' &(  % &" * . $%(* &' /(%"
"(  %
%(' % &%& (% *' & (-

Clause 17(d)
;-* &" &( " % (%.I&(" " ' " Õ(&%- 6(" J- " B&" /(  (&
  ""%-
&% &  " -* & &( 
" V;% 
 ($ B
4

Payments in respect of both employees as well as directors/partners/proprietors should
be reported under this clause in case of companies.
,$ - (%&( ($  & %  %%  ( 
" ($   %"( & % &' "* "'( 

"'(/ " %& -  %  " #

V;% 
 ($ B
4

á9 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
Clause 17(e)
7' &  &(%@" (( (   &
&- (% (>  &
&- ($
 &-9$ 9  & %  %%  $(% ($$  9 %(" %('
& 
- / " (& % 1 % 

V;% 


;-* &" $(%
% ' ($ (&%& ($ -* &" $(% % % "" ($ (&%&  /%(." %
(& % 1 %  &(
% (%&   % &'"  "

,$ &' *("& "  % - (* "&(%-  & % &' "* " (& % 1 %  &(
% (%& 
 %  " # 

6'*" <&' %" " |,7   ,7Õ #HH  | C ,& % "& ( %% %" ($ " " &
/" (" %  " (&
.  
& (* "&(%-  & %

Clause 17(h)
,$  *( & " "(/  9" 
  &' "* '"
   "'  (&( ($

  " '  & %
"(/   %
(&' " &("K
,& '"
 '  &'& "(/ 9" &(  (&
* /'   & %($&"
% (* &  "&*& 
""
V|,7 " ; % "'(&'* 7*% %  # ,7Õ 
<; V|,7 " ;*' '" ! ,,J  J

Clause 17(i)
,$ %("( $(% .%& &- " (& *  (% /&' B; &  &(% / ' &(
1 $- '" % (%&  3(%* 4
|
4(>(/
&-  %
# " (  " $(% (&
* .  %("(  (% /&' B;

30 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
Clause 17 (f):
Provisions of S. 40(a)
S. 40(a) disallows the following.

,& % "& %(-&- $ " $(% & ' " % " (% (&' % " * '%. 
  % &'" & /'' "
-



( &" ,2 (%

, , &(  (>% " & (&
.  (*- (% &(  $(% . (*-  $ &' &
'" (&
  &' % ( (%   &  &' % $%(*  % '& % L ,,>2

772

372

*( & ($ &    ( &' ;B; (% "" ""  &  %((%&( ($ (% (&' %/" ( &'
"" ($
- " ' %($&" (% ."


: &'>&


;-* & &(  ;3 (% (&' % $  "&
"'  $(% *(- "
 $&  "" %( % %%. * &" ($
7 ( - &
 -* & ( & ($ " ' $  % *

,(* 7 
- *(- % ( ; %1 "& " ($ *(- V


,& % "& (**""( (%
%( %. % & %(-&- $ " $(% %($ ""( (% & ' " % " &(
% " & ( /'' 7 " (&   &  (%  /&' &'  &


- -* & /'' " '%. 
  % &' '  % "
$ & " -


( &" ,2 (%

&(  (>% " &  $ &' & '" (&
  &' % ( (%   &  &' % $%(*
 % '& % L ,,>2

31 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
 MSMEDA á006
<%( A *AA<  *A& %%" "A  (* &A&

Particulars Invesment
Plant & Machinery Equipment
(Manufacturing) (Service)
Micro Enterprises * 8&(AA6" 8&(AA6"
Small Enterprises * A6"A&(AA|%(% " A6"A&(AA|%(% "
<  * & %%" " A|%(% "A&(AA|%(% " A|%(% "A&(AA|%(% "

Ë 
 
   

‰
  @

  
            
          
    

            
  
‰    
            !"
  


 #      
  
  
       
 

@

3á of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
 MSMEDA á006

(%. &(
 ($ < <  where any buyer is required to get his annual accounts
audited  % - / $(% &' &*
.  $(% " '
- % "' $ %"' &' $((/.
&( $(%*&(  '"   "&& * & ($ ( &"

7' % *( &  &' & % "&  &' % ( % *.  &( - "  % "
& &'  ($ ' ( &. - %2
,& % "& 
- &'
- %  & %*" ($
! (. /&' -* & *( & * &( &'
"  %
-( &' (&  -  %. ' ( &. %2
,& % "&   -
 $(% &'  %( ($  -  * . -* &
,& % "& %   % *.  & &'  ($ ' ( &. - %2 
7' *( & ($ $ %&' % & % "& % *.   -
    &' "  . - %"
& " ' & /'  &' & % "&  " " 
( % & -  &( &' "* & %%"
$(% &'  %(" ($ "(/ "    &
  & % 9" 

Tax Auditors duties

7' ,& % "& 
&-9-* &  %
! $ 
&  &( ;6 9 / ' &(
* &( 

- &' &  &(%  '" &  & % (%& under clause 17(e) " &'" *( & "  %%  $(% 
 %(" /'' " (&% &( ($ /

33 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
18. Particulars of payments made to persons specified under section 40A(á)(b)

Clause 18:
7' &  &(% " (- % 1 %  &( . %& %" ($ -* & &(  %"(" " $   %


  % &'"  "

He is not required to give his opinion on the unreasonability/excessiveness of the
payments. That is the AO·s prerogative.

34 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
H
*( &"  *  &(
%($&"  ."  % " &(  (%  (% |


- *( & ($ %($& '%. 

 &( &  % " &(   (* &&(
&' % ($


M , % " & ($ - " * % $ %%  &(   "  

    9 $ ($ " &(
 &' 
&- $(% /''2

 % > "&  ( &' $%"& - ($ &' % ( " - %

& /" (& (/   &'
"" ""* & ($ - %  . % ( " - %  /")
   %. &' % ( " - %2

 (&   %. &' % ( " - %2

 /"  %%   &' % ( " - %  /")

  ( (%
$(% &'  & $(% $ %"'. &' % & % ($ (* ($ &' % ( " - %
 % " &( H2

 (&  ( (%
$(% &' $(% " &
(ii) *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.

35 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
  *( & ($ Modified Value Added Tax credits (now Cenvat credits)  
($ (% &"   %. &' % ( " - %  &" &% &* &  &' %($&  (""
( &  &% &* & ($ ( &"&. <($     7 % &" 
&' ( &"

 ;%& %" ($ (* (%  & % ($ prior period % &  (% 
&  &(
&' ;6 ( &


&" ($ any amount

(%%(/  ( '  (% any amount  &' % (
 . & % "& ( &' *( &
(%%(/  %  (&' %/" &'
&'%( .'  ( & - ' 1
V 
!H 
 M ;%& %" ($ ' ( (%  ("&   *( &  . &' *& " $  
" &( !H &  (%  &   %. &' % ( " - % )>
 * % ""   %* & ( &  *
% $ 
 /&' &' "" ""  ($ &'
  % (%  ("&(%2
 *( & ($ ( (%  ("& &  (%  & 2
 /' &' % &' ( (%  ("& /" "1 %    %. &' % ( " - %2
 ** * *( & ( &"&.  &' ( & & - &*  %. &' % ( " - %2
 /' &' % &' ( (%  ("& /" &  (%  &  (&' %/" &'
-  ( &
- ' 1 (%  ( & -
 %$&


M7' " %& %"  " (&
.   &' " ($  B( %* & (*- 
 . (*- 
(%(%&( "&
"' 
-  | &% && (% ;%( &


36 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya



 ;%& %" ($ ' % -* & ($ ( (%  ("&   *( &  . &' *&
" $   " &( !H7 *  %. &' % ( " - % )>
 * % ""   %* & ( &  *
% $ 
 /&' &' "" ""  ($
&' - 2
 *( & ($ &' % -* &2
 ** * *( &" ( &"&.  &' ( & & - &*  %. &' % ( "
- %2
 /' &' % &' % -* & /" * (&' %/" &'
- ( & - ' 1 (%
( & -
 %$&
 :' &' %   %&$& '"
 (
&  $%(* &' "" "" % .%. & . (%  &.
( (%  ("& (% % -* & ($ &' "* &'%( .'  ( & - ' 1 (% 
( & -
 %$&
V= "94(

7' %& %"  &(  & 

  &' | %&$& &  
(   (&
.   &'
" ($  % -* & ($ - ( (%  ("& &  (%  &  $%(* B( %* &
B( %* & (*-
 . (*- (%  (%(%&( "&
"' 
-  | &%
&& (% ;%( &

37 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
Clause á4(a)
 %( " ( & 
- &' " . . & (
'$ ($ '" % " (& 
( (%  ("&

 %    ."& " " (&  ( (%  ("&

 %&-  ("&" ."& (&%&" &
% 4 ("&"@

7' &% " &'& % & &( &%"&(" /&'  "  %   "&(* % % (& (
(%  ("&"  & 

,$ &' ..% .& ("9 ("&"   - % $%(*  ".- %&-   Õ"
 

& '   & * "  "" &' Õ"
  &' $(%*&( / "&
% 1 % 
&(
.   % " & ($  " ' &% " "&%&. $%(* &' &%- /'  &'

 % ' " Õ"
  (% *(%  & &'
 .( " (/
(/
Õ"
 

7' B '& D.' |( %&  &' " ($ |,7 " './& ;%" G(% D83
 ! ,7Õ # '" '  &'& /' % &' ( &%"&( /" .   
&' % /"  ** &   ""&- $(% *( - "% &( " 
- &' ($$ %  %
&( #  (& &(  -  &-  % &( # $(% (&( ($ &'
%("(" ($ &( !H " G "&$ 

Penalty for Contravention of á69SS/T = Amount of loan or deposit [S. á71D/E]

38 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
á5.
!0 &"A($A
%( .'&A$(%/%A(""A(%A % &(A(/ AA&' A$((/.A* % A
&(A&' A & &A
 )

" ! -& ' ! & ! & 0!*
-! # . /""  0 &,

 &
&0 0'&

&0 0"& 

! /' &' %  '.  "'% '(. ($ &' (*- '" &    &' % ( "
- %  &( /'' &' ("" "  %%  %(% &( &' % ( " - % (&
(/ 
&(
%%  $(%/%  & %*" ($ " &( #H

39 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
Clause á5(a)
*( & &(
"&&  "  % % & %  "" ""* & (% %"  & (% %"
% "(  % &$&( (% %" ($ Past AYs

'( 
" %& - .   % ' '  ($ (*  % /'' &'
(""9 % &( % * 
"(%


, &' Õ *% " ( * $(%*&( 
( &  . "" ""* & 9 " 9
% &$&( 9 % "( %( ." (%  -  $. ("" % & %" *-
. 

Clause á5(b)
 " (- &( |("
 /'' 
 % (& "
"&&- & % "& 

;%("( ($
#H > / (& -  &' $((/. " " /' %  '.  &'
" (&. (/ % & "    ;= "  % " & ($
&' ($  "'% '( %2 V$%"& %("( &(
#H
B$& ($ "'% " &( - % & ($ &' "'% '( % * . " ' .$&2 
*.*&( (% * %. % ($  $(% . (*- "
G & &( &' (&( &'& +
"'% '( % ($ &' *.*&. (%  * %.  $(% . (*- (& &(
&'
"'% '( %" ($ &' *.*&  (% &' % " &. $(% . (*-

8
"(%
 % &( 9"   
"(%
  &$ Õ " %' (/ 9"
 
%%  $(%/%  "& '. "'% '(. 5 +

40 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
á6. &(>/"  &" ($   &(" $ - *""
  % |'& % ,

á7.
 :' &' % &' "" "" '" (*  /&' &' %("(" ($ |'& % L ,,>
% .%.   &( ($ & & "( %  % .%. &' -* & &' % ($ &(
&' % & ($ | &% B( %* & V#/- 

(b) ,$ &' %("(" ($ |'& % L ,,> ' (&

 (*  /&'  " .
&' $((/.  &"M * -)>
 7   &
  (&   &  & 
 "'(%&$ ( ( & ($  "" %   &( &' % 1 %  &(
  & 
 &   &  &
 &   & 
& (&  &( &' % & ($ &' | &% B( %* &
E; " . &'  &" ($ " " ( %    &(  
(
F

41 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
|
 
 


  

   
    

     



  
 
 

 
 

  

 



 
 


   
 
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$% 
      

    
  
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4á of 5á . / /0|#/1 2
/( Taxing Time for Tax Audit ² CA K.G.Acharya

| " A#
AE7A  &
 AA(&A  & A&AFA
Sl. No. Relevant Particulars of the Amount of tax deductible but Remarks
Section amount credited / paid not deducted

| " #

 E"'(%&$ ( ( & ($  "" %   &( &' % 1 %  &(

  & F
Sl. No. Relevant Particulars of the Amount of Amount of Remarks
Section amount credited / paid Tax deductible tax
deducted

4(&   &. | (% | "" &&*( &" &( "'(%&   &(

43 of 5á Suggested format for reporting Non-Compliances Taxing Time for Tax Audit ² CA K.G.Acharya
 7' (>(* " % 1 %  &(
% (%&    " #
 E7   & 
& F *-
 &' $((/. $(%*&)
Sl. Relevant Particulars of the Amount of Due date of Amount of Remarks
No. Section amount credited / Tax deductible deduction tax
paid deducted

| " #

 E7   & 
& (&  &( &' % & ($ &' | &%
B( %* & E

Sl. Relevant Particulars of the Amount of tax Tax Deducted but Remarks
No. Section amount credited / Deducted not deposited
paid with the Central
Govt.

Õ (%&A(-A" "A/' % A

TDS has been deducted but not paid before the last date of the previous year under
audit.

44 of 5á Suggested format for reporting Non-Compliances Taxing Time for Tax Audit ² CA K.G.Acharya


 , &' " ($  &%. ( % . 1 &&&  &" ($ % & *" ($
.((" &%  )
  . &( 2
 ; %'" "  %. &' % ( " - %2
  "  %. &' % ( " - %2
 |(". &( 2
 '(%&. 9  "" $ -

 , &' " ($  * $& %. ( % 1 &&&  &" ($ &' % & *" ($ %/
*& %" $"'  %( &" 
->%( &")


Õ/ <& %")

  . "&( 2
 ; %'" "  %. &' % ( " - %2
 |(" *&(  %. &' % ( " - %2
  "  %. &' % ( " - %2
 (". "&( 2
 M -  ($ $"'  %( &"2
 M ; % &. ($ - 2
 M '(%&. 9  "" $ - M7( &' & & 


45 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
 
3"'  %( &"9->%( &" )
 ( . "&( 2
  %'"  %. &' % ( " - %2
 1 &&- * $& %   %. &' % ( " - %2
 " "  %. &' % ( " - %2
 (". "&( 2
 "'(%&. 9  "" $ -
M $(%*&( *-
.  &( &' & & 


H
, &' " ($  (* "& (*-  &" ($ & ( "&%

&  %($&"  %
" &(   &' $((/. $(%* )>
 &(& *( & ($ "&%
&  %($&"2

 &(& &  &' % (2
 & " ($ -* & /&' *( &"


:' &' % - ("&  & /" %%  ( & $ - " ("  (- ($ &' % (%&
($ " '  & V " &( HH


:' &' % -  & /" ( &   % &' | &% " & H $ - "
("  (- ($ &' % (%& ($ " '  &

46 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya

( &. %&(" /&'  &(" " $((/" )>
 B%("" %($&97 %( %2

 4 & %($&97 %( %2
 &( >>&% 97 %( %2
 <& % (" * 93"'  .((" %(  


 %
$  

Clause3á:
4 * %&(%"   (*&(%" "  $(%  &. &' %&( "'(  "(

" $ 

Õ&(" ' &(
.  $(% &'
" "" "  /'(

, " ($  %& %"' $%* &'  & %($& %&( "'( 
 &  $& %
'%.. " ' & % "&  % *  %&( " &' " & *" ("&& &  '%. ($
%($& "  % B;

47 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
 Annexure - I
PART A

A4* A($A&' A"" "" A

A% ""

A; %* &A( &A4 *
%A
(* "&A|(*-AA/''A
A

A && "A % A(&A"
"&&-A& % "& 


A;% ( "A- %A  A
!
A"" ""* &A- %A
PART B
Nature of business or profession in
respect of every business or
profession carried on during the
previous year
CODE

48 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
 






 


  

 !
 "  # 

"


$$ $$
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%  & '"

%  #








(#'(  
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#+ %  ,,$ ,
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/
*  , ,
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- 1

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  ,,- $
$ 1

# $- ,,
   
*  
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, 
  
/ 3 #  , $,
 

#4
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#+ 
%  $$ -
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49 of 5á Ö
 

 Taxing Time for Tax Audit ² CA K.G.Acharya
 Expense s.t to FBT Value of FB
1 Privilege/Service/Facility/Amenity - Directly or Indirectly by E'R to E'E 0%
á Any Free or Concessional ticket for private ourneys 100%
3 Contribution to Superannuation fund > Rs.100000 Per Employee 100%

1 Entertainment á0%
á Hospitality of every kind to any person á0%
3 Conference á0%
4 Sales promotion, including publicity excluding advertisement á0%
5 Employees Welfare á0%
Conveyance á0%
6
Tour and travel  . $(% . &%  5%
7 Use of Hotel, boarding and lodging á0%
8 Repair, running (incl. Fuel), maintenance of Cars and depn. thereon á0%
9 Repair, Running (incl. fuel), maintenance of aircraft and dep. thereon á0%
10 Use of Telephone including mobile phone (other than leased lines) á0%
11 Maintenance of accommodation in the nature of guest houses á0%

1á Festival celebration 50%

13 Use of health club and similar facilities 50%
14 Use of any other club facilities 50%
15 Gifts 50%
16 Scholarship 50%

50 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
FBT requirements and Tax Audit Report:

Nature of Business:
,$ &' "" "" " %%-. ( * & && "  "($&/% '%/% &%. &
&' ( ""(%-  ($ $%.
 $&" 
1 &$ 
"  ( " %&

(( " ($ ( & *&  $(% ' &&-

, " &' "" "" " (& *&. " %&
(( " ($ ( & 3  N 4(
 ($
&' % % " .. "&" &'& &'  & % *-
&&%
&  &( %( " && "
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Effect of CBDT circular on Tax Auditors

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51 of 5á Form No. 3CD ² Part B Taxing Time for Tax Audit ² CA K.G.Acharya
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5á of 5á Taxing Time for Tax Audit ² CA K.G.Acharya