Budget 2014-15 : What's Good and What's Not So Good ??
We saw a deluge of analyses coming on Budget 2014 right from 11th July 2014. However, we chose to wait for clarifications and finer details so that readers get the right perspective for themselves.
People would have different opinion about the budget depending on their own profession and field. However, from investor and taxpayers point of view, we have made an attempt to list down few good things and few not-so-good things about the budget.
What's Good ?
- The Nil Tax Slab has been raised to Rs. 2.5 lakhs. Since the other slabs i.e. 10%, 20% and 30% slabs were untouched, this provides a saving of Rs. 5,000 to every individual /HUF earning more than or equal to Rs. 2.5 Lakhs. (There have been some misundertandings wherein people have interpreted that those in 30% tax slab will save Rs. 15,000 due to this change. But it is untrue. Your total tax saved due to this increase in nil tax slab, will be max Rs. 5,000).
- The maximum limit u/s 80C has been hiked to Rs. 1.5 Lakhs. While this enables additional tax saving, readers are advised to be wary about where are they putting their additional Rs. 50,000. There is a world of mis-sellers on prowl to pitch you their investment-cum-insurance plans to grab your additional Rs. 50,000. Before you invest this, just do some base calculations such as :
a. Add your PF deduction of the entire financial year.
b. If you have a home loan, add the principle repayment amount of your home loan. (You need to obtain a loan repayment schedule from the bank for exact figures).
c. If you have a term plan, add your term plan premium. If you don't have a term plan yet, immediately buy one.
For example, if you have Rs. 4000 as your monthly PF deduction. Then you would have Rs. 48,000 towards PF. Then lets say your home loan principle repayment adds up to Rs. 60,000. And you have a term plan with an annual premium of Rs. 10,000. So now these 3 items add up to Rs. 1,18,000. Thus, you only need to invest Rs. 32,000 towards your 80C. Till last year, you might be investing more than Rs. 1 Lakh but getting tax benefit for only Rs. 1 Lakh. This year, plan in advance to get the full benefit.
3. The maximum limit u/s 24B has been hiked to Rs. 2 Lakhs from 1.5 Lakh earlier. This could come as a great breather for those already having home loans and who are servicing EM Is. Those who have recently availed home loans, would have a higher component of interest in their EMIs in the initial years. Thus, this increase in exemption would help them to save some tax. Someone in 30% tax slab can get a tax saving of as high as Rs. 15,000 with this. Also, those couples having double income can save upto Rs. 30,000 given that :
a. Both are co-owners of property
b. Both are co-applicants of home loan
c. Both are contributing towards EMI
However, for those who are looking to buy property as an investment are advised to view this with caution. Sec 24B is applicable on self occupied property. For rented out properties, entire interest can be set-off against the rent received. Thus, there is no change on that.
4. Other than above, there have been certain measures taken which would contribute towards overall growth of the economy. This could result in equity markets giving good returns. Thus, investing systematically in diversified equity could be helpful in wealth creation.
What's Not-So-Good ?
- Given the hefty inflation numbers, the Nil tax slab was expected to be increased till Rs. 3 Lakhs and 80C limit was expected to be hiked to Rs. 2 Lakhs. In fact, if it was hiked to Rs. 2 Lakh, government could have had access to huge low cost funds to plug the fiscal deficit. But it was marginally increased.
- The Long term holding period for non-equity mutual funds was increased from 12 months to 36 months. Also, the tax slab of 10% without indexation was removed and uniformly 20% with indexation was applied for non-equity mutual funds. This came as a big blow to the investors in debt mutual fund. Investors who had invested in FMPs which would mature after 10th July 2014, are feeling cheated.
What can we do about it ?
As they say, there is no point in crying over spilled milk. Investors now need to tweak their strategies and see how they can benefit (or at least reduce loss).
- Even now, debt mutual funds haven't really become a bad option. It's just that, the tax arbitrage has gone for those holding between 12-36 months.
- Life is pretty much same for those investing in debt mutual funds for less than 12 months (be it any tax slab).
- Life is pretty much same for those in 10% slab as If they redeem debt mutual funds after 1 year, they will still pay 10% on the gains.
- Life is slightly different for those in 20% slab as they will have to invest with a time horizon of more than 36 months if they want to reduce tax liability.
5. If you are in 30% tax slab, FDs and Debt Mutual Funds have become at par for a period of less than 36 months. But if you want to invest for more than 36 months, debt mutual funds still give you tax arbitrage. FD income will be taxable at 30% whereas debt mutual funds will be taxed at 20% with indexation.
All-in-All, the budget comes with a mixed reaction. But that's how life is. You cant expect every day to come with a good news. You can just have a positive and receptive mind, which accepts every challenge as an opportunity, and take best possible advantage of the same.
We look forward to your valuable comments and feedback.
The Author Prof. Saurabh Bajaj is CEO with Nidhi Investments, Mumbai. He may be contacted on CEO@nidhiinvestments.com if you have any questions.
(The views mentioned in the article are personal opinion of the author)
Section 186- Loan and Investment by Company
CS M. Kurthalanathan
LOANS AND INVESTMENT BY COMPANY –SEC.186Investment by company:
A company shall unless otherwise prescribed, make investment through not more than two layers of investment companies except – if ;
(i) a company from acquires any other company incorporated in a country outside India if such other company has investment subsidiaries beyond two layers as per the laws of such country;
(ii) a subsidiary company has any investment subsidiary for the purposes of meeting the requirements under any law or under any rule or regulation framed under any law for the time being in force.
Activities Covered:
- giving any loan to any person or other body corporate;
- giving any guarantee or provide security in connection with a loan to any other body corporate or person; and
- acquiring by way of subscription, purchase or otherwise, the securities of any other body corporate.
Limits:
The aggregate of activities, which are made directly or indirectly by the company, should not exceed the limit of –
| 60% of its paid-up share capital, free reserves and securities premium account or 100 % of its free reserves and securities premium account, Whichever is more |
Approval by Special Resolution:.
Where the aggregate of the loans and investment so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate along with the investment, loan, guarantee or security proposed to be made or given by the Board, exceed the limits specified under section 186 no investment or loan shall be made or guarantee shall be given or security shall be provided unless previously authorised by a special resolution passed in a general meeting.
The company has to pass the special resolution within one year from the date of notification of this section.(i.e.,on or before 31st March,2015)
A resolution passed at a general meeting to give any loan or guarantee or investment or providing any security or the acquisition shall specify the total amount up to which the Board of Directors are authorised to give such loan or guarantee, to provide such security or make such acquisition
Exceptions:
Prior approval by means of Special Resolution passed at a general meeting is not required – if
- a loan or guarantee is given or where a security has been provided by a company to its wholly owned subsidiary (WOS) company or a joint venture (JV) company, or
- acquisition is made by a holding company, by way of subscription, purchase or otherwise of, the securities of its WOS company
Disclose in Financial Statement:
The company shall disclose to the members in the financial statement the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security.
Approval of PFI:
An investment shall be made or loan or guarantee or security given by the company only after the resolution sanctioning it is passed at a meeting of the Board with the consent of all the directors present at the meeting.
If any term loan is subsisting in a company, prior approval of the Public Financial Institution (PFI) concerned is also required for making any investment, loan, guarantee or security.
Exceptions:
- Where the aggregate of the loans and investments so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate, along with the investments, loans, guarantee or security proposed to be made or given does not exceed the 60% of its paid-up share capital, free reserves and securities premium account or 100 % of its free reserves and securities premium account, Whichever is more; and
- There is no default in repayment of loan instalments or payment of interest thereon as per the terms and conditions of such loan to the public financial institution.
Inter-Corporate loans/Deposits:
Companies which are registered under section 12 of the SEBI Act, 1992 and covered under such class or classes of companies as may be prescribed, shall not take inter-corporate loan or deposits exceeding the prescribed limit and such company shall furnish in its financial statement the details of the loan or deposits.
Rate of Interest:
No loan shall be given under this section at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan.
No company which is in default in the repayment of any deposits accepted before or after the commencement of this Act or in payment of interest thereon, shall give any loan or give any guarantee or provide any security or make an acquisition till such default is subsisting.
Register of Loans, Investments, Guarantee or Security :
| Form | Every company giving loan or giving guarantee or providing security or making an acquisition of securities shall, from the date of its incorporation, maintain a register in Form MBP (w.e.f 1st April, 2014) and enter therein separately, the particulars of loans and guarantees given, securities provided and acquisitions made as aforesaid |
| Entries in the Register | The entries in the register shall be made chronologically in respect of each such transaction within 7 days of making such loan or giving guarantee or providing security or making acquisition |
| Place of Keeping | The register shall be kept at the registered office of the company and the register shall be preserved permanently and shall be kept in the custody of the company secretary of the company or any other person authorised by the Board for the purpose. |
| Authentication | The entries in the register (either manual or electronic) shall be authenticated by the company secretary of the company or by any other person authorised by the Board for the purpose |
| Maintenance | The register can be maintained either manually or in electronic mode. |
| Inspection | The register shall be open to inspection at registered office of the company |
| Extract from Register | The extracts from the register may be furnished to any member of the company on payment of such fee as may be prescribed in the Articles of the company which shall not exceed Rs.10/- for each page |
Companies/ Transactions Exempted:
This section shall not apply –
- to a loan made, guarantee given or security provided by a banking company or an insurance company or a housing finance company in the ordinary course of its business or a company engaged in the business of financing of companies or of providing infrastructural facilities;
- to any acquisition made by a non-banking financial company registered under Chapter IIIB of the Reserve Bank of India Act, 1934 and whose principal business is acquisition of securities in respect of its investment and lending activities;
- to any acquisition made by a company whose principal business is the acquisition of securities;
- to any acquisition of shares allotted in pursuance of section 62(1)(a).(Further Issue of Capital)
"business of financing of companies" shall include, with regard to a Non-Banking Financial Company registered with Reserve Bank of India, "business of giving of any loan to a person or providing any guaranty or security for due repayment of any loan availed by any person in the ordinary course of its business".
investment company" means a company whose principal business is the acquisition of shares, debentures or other securities;
"infrastructure facilities" means the facilities specified in Schedule VI.
Penalty:
| Company | Fine of Rs.25,000/- to Rs.5,00,000 |
| Officer | Imprisonment up to 2 years and Fine of Rs.25,000/- to Rs.1,00,000/- |
Companies Act,1956 Vs Companies Act,2013:
| S.No | Cos Act,1956 | Cos Act,2013 |
| 1 | The limit prescribed was 60 % of Paid-up share capital and Free Reserve or 100 % of Free Reserves whichever is more. | The limit prescribed is 60% of its paid-up share capital, free reserves and securities premium account or 100 % of its free reserves and securities premium account, Whichever is more |
| 2 | Rate of interest should be in respect of bank rate under RBI Act. | Rate of interest should be in respect of dated government security. |
| 3 | Loans or investments by holding company to its WOS company were exempted. | There is no exemption for these loans/investments. |
| 4 | Private Companies were totally exempted from the provisions of Section 372A. | Even Private companies will be subject to strict compliance. |
| 5 | One could escape from the punishment of imprisonment by fully repaying the inter-corporate loan contravening sec.372A q | This is not possible |
| 6 | For the purpose of This is not so under Sec.186. Sec.372A, loan includes debentures. |
Amendments to Finance (NO.2) Bill 2014 -As introduced in Lok Sabha)
List No. 2
LOK SABHA
FINANCE (NO.2) BILL 2014
(As introduced in Lok Sabha)
Notice of Amendments
| Sl. No. | Name of Member and Text of Amendments | Clause No. |
| SHRI ARUN JAITLEY: | ||
| 5. | Page 6, after line 48, insert-
| 3 |
| 6. | Page 12, after line 7, insert- | 31A (New) |
| Amendment of Section 92C. | '31A. In section 92C of the Income Tax Act, in sub-section (2), after the second proviso, but before the Explanation, the following proviso shall be inserted with effect from the 1st day of April, 2015, namely:-
| |
| 7. | Page 12, for line 28, substitute-
| 34 |
| 8. | Page 14, after Line 8, insert - | 44A New) |
| Amendment of section 119. | 44A. In section 119 of the Income tax Act, in sub-section (2), in clause (a), after the figures and letter "234C", the figures and letter "234E" shall be inserted with effect from the 1st day of October, 2014 | |
| 9. | Page 17, after line 30, insert - | 62A(New) |
| Amendment of Section 243A. | '62A. In section 245A of the income tax Act, in clause (b), with effect from the 1st day of October, 2014,-
| |
| 10. | Page 17 after line 30, insert - | 62B(New) |
| Amendment of section 245N. | '62B In section 245N of the income tax act, with effect from the 1st day of October, 2014.-
| |
| 11. | Page 17 after line 30 insert- | 62C (New) |
| Amendment of section 245-O. | '62C. In section 245-O of the Income tax Act, for sub-sections (2), (3), (4) and (5), the following sub-sections shall be substituted with effect from the 1st day of October, 2014, namely:-
| |
| 12. | Page 19, after line 51, the following shall be inserted, namely:- | 71A (New) |
| Amendment of Act 27 of 1957 | "Wealth-tax
| |
| 13. | Page 21, after line 19, insert -
| 80 |
| 14. | Page 21, line 30, for "duty demanded or penalty imposed or both" substitute -
| 83 |
| 15. | Page 21, lines 33 and 34, for "duty demanded or penalty imposed or both", substitute -
| 83 |
| 16. | Page 21, lines 36 and 37, for "duty demanded or penalty imposed or both", substitute-
| 83 |
| 17. | Page 21, after line 42, insert - | 83A (New) |
| Substitution of new section for section 129EE. | "83A. In the Customs Act, for section 129EE, the following section shall be substituted, namely : - | |
| Interest on delayed refund of amount deposited under section 129E. | "129EE. Where an amount deposited by the appellant under section 129E is required to be refund consequent upon the order of the appellate authority, there shall be paid to the appellant interest at such rate, not below five per cent and not exceeding thirty six per cent. per annum as is for the time bering fixed by the Central Government, by notification in the Official Gazette, on such amount from the date of payment of the amount till, the date of refund of such amount:
| |
| 18. | Page 24, after line 15, insert-
| 95 |
| 19. | Page 24, line 26, for "duty demanded or penalty imposed or both", substitute-
| 98 |
| 20. | Page 24, lines 29 and 30, for "duty demanded or penalty imposed or both", substitute-
| 98 |
| 21. | Page 24, lines 32 and 33, for "duty demanded or penalty imposed or both", substitute-
| 98 |
| 22. | Page 24, after line 43, insert- | 98A (New) |
| Substitution of new section for section 35FF. | '98A. In the Central Excise Act, for section 35FF, the following section shall be substituted, namely:- | |
| Interest on delayed refund of amount deposited under section 35F. | "35FF. Where an amount deposited by the appellant under section 35F is required to be refunded consequent upon the order of the appellate authority, there shall be paid to the appellant interest at such rate, not below five per cent. and not exceeding thirty six per cent. per annum as is for the time being fixed by the Central Excise Government, by notification in the Official Gazette, on such amount for the date of payment of the amount till, the date of refund of such amount.
|
List No 3
LOK SABHA
FINANCE (NO.2) BILL, 2014
(As introduced in Lok Sabha)
Notice of Morions under Rule 388
| Sl. No. | Name of Member and text of Motion | Clause No. |
| SHRI ARUN JAITLEY: | ||
| 23. | "That this House do suspend clause (i) of rule 80 of Rules of Procedure and Conduct of Business in Lok Sabha in so far as it requires that an amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates, in its application to the government amendment No. 6* to the Finance (No.2) Bill, 2014 and that this amendment may be allowed to be moved." | 31A (New) |
| 24. | "That this House do suspend clause (i) of rule 80 of Rules of Procedure and Conduct of Business in Lok Sabha in so far as it required that an amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates, in its application to the Government amendment No. 8* to the Finance (No.2) Bill, 2014 and that this amendment may be allowed to be moved." | 44A (New) |
| 25. | "That this House do suspend clause (i) of rule 80 of Rules of Procedure and Conduct of Business in Lok Sabha in so far as it requires that an amendment shall be within the scope of the Bill and relevant to the subject mater of the clause to which it relates, in its application to the Government amendment No.9* to the Finance (No.2) Bill, 2014. | 62A (New) |
| 26. | "That this House do suspend clause (i) of rule 80 of Rules of Procedure and Conduct of Business in Lok Sabha in so far as it requires that an amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates, in its application to the Government amendment No. 10* to the Finance (No.2) Bill, 2014 and that this amendment may be allowed to be moved." | 62 B (New) |
| 27. | "That this House do suspend clause (i) of rule 80 of Rules of Procedure and Conduct of Business in Lok Sabha in so far as it requires that an amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates, in its application to the Government amendment No. 11* to the Finance (No.2) Bill, 2014 and that this amendment may be allowed to be moved." | 62C (New) |
| 28. | "That this House do suspend clause (i) of rule 80 of Rules of Procedure and Conduct of Business in Lok Sabha in so far as it requires that an amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates, in its application to the Government amendment No.12* to the Finance (No.2) Bill, 2014 and that this amendment may be allowed to be moved." | 71A (New) |
| 29. | "That this House do suspend clause (i) of rule 80 of Rules of Procedure and Conduct of Business in Lok Sabha in so far as it requires that an amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates, in its application to the Government amendment No.17* to the Finance (No.2) Bill, 2014 and that this amendment may be allowed to be move." | 83A (New) |
| 30. | "That this House do suspend clause (i) of rule 80 of Rules of Procedure and Conduct of Business in Lok Sabha in so far as it requires that an amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates, in its application to the Government amendment No.22* the the Finance (No.2) Bill, 2014 and that this amendment may be allowed to be moved." | 98A (New) |
New Delhi
Dated: July 24, 2014
Dated: July 24, 2014
(P Sreedharan)
Secretary-General
Secretary-General
NEW DELHI, JULY 30, 2014: THE issue before the Bench is - Whether the expression 'Tax, Duty, Cess or Fee or by whatever name called' mentioned in the provisions of Sec 43B brings under its sweep port dues payable by the assessee to a government agency. And the answer of the Tribunal is NO.
Facts of the case
The assessee is a Special Purpose Vehicle designed for completion of work as per the agreement entered into between Maharashtra Maritime Board (MMB) and Balaji Leasing & Industries Co. Ltd. – a group concern of the assessee's company. During assessment, AO had noticed that the assessee had claimed wharfage expenses/port dues of Rs.1.23 crores as compared to the last year expenditure at Rs.0.08 crores. When called for an explanation in this aspect, the assessee company submitted that it had entered into an agreement with Maharashtra Maritime Board (MMB) on 17.3.02. Pursuant to the said agreement, the assessee company started operation from one berth at Dighi Port. As per the said agreement, the assessee company had to pay the royalty to MMB for cargo handling at Dighi Port. The said expenditure claimed was thus relating to the whafage/port dues paid/payable by the assessee company to MMB. The AO however observed that the said agreement as per which, BLICL was to design, finance, construct, operate, maintain and manage a multi-purpose, common user port at Dighi. The MMB had agreed to grant licence for 50 years to BLICL to build a multipurpose common user port on Build, Own, Operate, Share and Transfer (BOOST) basis on the terms and conditions contained therein. Since the licence was given to BLICL, the assessee company was not required to pay any dues in the nature of wharege/port dues to MMB as the agreement was between MMB and BLICL. AO further noted that MMB was a Statutory Body incorporated under the Maharashtra Maritime Board Act, 1996. Hence any dues payable to MMB were statutory dues and were covered u/s. 43B. Hence, the provision made for the dues not paid to MMB because of any dispute of liability could not be allowed in the hands of the assessee. AO therefore disallowed the expenditure of Rs.82,92,783/- which was claimed to be payable by the assessee to MMB.
On appeal before CIT(A), assessee had submitted that the agreement entered in between MMB 'the licensor' and BLICL 'the licensee' contained a clause 'corporate structure in 11.1' wherein it had been provided that the project would be developed through a new Special Purpose Vehicle which would be registered under the Companies Act, 1956. This SPV would be the licensee under the agreement. Thereafter a Novation of Concession Agreement was signed in favour of Dighi Port Ltd. being SPV for the purpose of designing, developing, constructing, operating, maintaining and managing Dighi Port. It was also provided in the agreement that all the obligations and responsibilities which form part of original concession agreement and amended concession agreement would be effective from the date of concession agreement signed. Accordingly, all the liabilities had been vested in the assessee from the very beginning i.e. from the time when Concession Agreement was executed. Further that the MMB had entered into agreement wherein the tariff rates had been fixed at Rs.3/-, but the same was increased to Rs.30/-. Hence the assessee, having disputed the said increase in rates, was perforce required to make provision in accounts for the balance amount and therefore the said amount was liable to be allowed as deduction. CIT(A) observed that the AO had not considered the novation agreement between the assessee MMB and BIPL, vide which it had been agreed that Dighi Port would step into the shoes of BLICL and discharge all rights and obligations of BLICL. Hence it could not be said that Dighi Port had no locus-standi in wharfage/port dues payable of Rs.82,92,783/-. However, CIT(A) did not agree with submissions of the assessee that MMB was not a statutory body. He held that MMB was a Government organization, hence, the payment of wharfage/port dues was covered u/s. 43B. It was further observed that the assessee had not paid wharfage/port dues but made a provision in the profit and loss A/c. which was disallowable u/s. 43B. CIT(A) therefore confirmed the disallowance.
Having heard the matter, the Tribunal held that,
++ in the case of "CIT vs. McDowell & Co. Ltd." 2009-TIOL-74-SC-IT, SC while interpreting the provisions of section 43B(a) of the Act has held that it would be pertinent to note that the expression now used in Section 43B (i)(a) is "Tax, Duty, Cess or fee or by whatever name called". It denotes that items enumerated constitute species of the same genus and the expression 'by whatever name called' which follows preceding words 'Tax', 'Duty', 'Cess' or 'fee' has been used ejusdem generis to confine the application of the provisions not on the basis of mere nomenclatures, but notwithstanding name, they must fall within the genus 'taxation' to which expression 'Tax', 'Duty', 'Cess' or 'Fee' as a. group of its specie belong vis. compulsory exaction in the exercise of State's power of taxation where levy and collection is duly authorised by law as distinct from amount chargeable on principle as consideration payable under contract. The SC after detailed discussion of the matter held in the above mentioned case that the bottling fees for acquiring a right of bottling of IMFL which was determined under the Excise Act and Rule 69 of the Rules was payable by the assessee as consideration for acquiring the exclusive privilege. It was neither fee nor tax but the consideration for grant of approval by the Government as per terms of contract in exercise of its rights to enter a contract in respect of the exclusive right to deal in bottling liquor in all its manifestations. It was therefore held that since the said bottling fees was not the amount payable by way of any tax or duty or fee or cess, hence the same did not fall within the purview of section 43B;
++ similarly the Andhra Pradesh High Court in the case of "CIT vs. Andhra Ferro Alloys (P.) Ltd." has held that the electricity charges were in the nature of statutory liability and the unpaid disputed electricity charges could not be disallowed by invoking provisions of section 43B of the Act as the same were not payable by way of any tax or duty or fee or cess, but as a consideration for the use of electricity. The disallowance in question in this case is relating to wharfage/port dues which were in the shape of consideration payable by the assessee to the MMB as royalty for cargo handling at Dighi Port as per the contract between the parties. The said dues were not payable by way of tax, duty, cess or fee and hence as per the law laid down by the Hon'ble Supreme Court in the case of "CIT vs. McDowell & Co. Ltd." as well as by the Andhra Pradesh High Court in the case of "CIT vs. Andhra Ferro Alloys (P.) Ltd." the section 43B of the Act is not attracted in this case. Hence, the disallowance made/confirmed in this case by the lower authorities under section 43B of the Act was not called for and thus the finding of the CIT(A) in this respect is set aside and therefore ground No.1 of the assessee's appeal is allowed.
Changes made in Tax Audit Report – Assessment Year 2014-15
CA Pradeep Kumar
Changes made in Tax Audit Report
Assessment Year 2014-15
As amended by Notification No. 33 dated 25th July 2014 wef 25.07.2014
| Sr. No. | Particulars | Old Report | New Report – Changes are reflected by Bold Letters |
| FORM NO. 3CA | 3. In * my/our opinion and to the best of * my/our information and according to explanations given to * me/us, the particulars given in the said Form No. 3CD and the Annexure thereto are true and correct. | 3. In * my/our opinion and to the best of * my/our information and according to explanations given to * me/us, the particulars given in the said Form No. 3CD and the Annexure thereto are true and correct subject to the following observations/qualifications, if any: | |
| FORM NO. 3CB | 5. In * my/our opinion and to the best of * my/our information and according to explanations given to * me/us, the particulars given in the said Form No. 3CD and the Annexure thereto are true and correct. | 5. In * my/our opinion and to the best of * my/our information and according to explanations given to * me/us, the particulars given in the said Form No. 3CD and the Annexure thereto are true and correct subject to the following observations/qualifications, if any: | |
| FORM NO. 3CD – PART A | - | 4. Whether the assessee is liable to pay indirect tax like excise duty, service tax, sales tax, customs duty,etc. if yes, please furnish the registration number or any other identification number allotted for the same. | |
| FORM NO. 3CD – PART A | - | 8. Indicate the relevant clause of section 44AB under which the audit has been conducted. | |
| FORM NO. 3CD – PART B | 9. (a) Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed. (b) Books of account maintained. (In case books of account are maintained in a computer system, mention the books of account generated by such computer system.) (c) List of books of account examined. | 11. (a) Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed. (b) 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.) (c) List of books of account and nature of relevant documents examined. | |
| FORM NO. 3CD – PART B | 10. Whether the profit and loss account includes any profits and gains assessable on presumptive basis, if yes, indicate the amount and the relevant sections (44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB or any other relevant section). | 12. Whether the profit and loss account includes any profits and gains assessable on presumptive basis, if yes, indicate the amount and the relevant sections (44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB, Chapter XII-G, First Schedule or any other relevant section). | |
| FORM NO. 3CD – PART B | - | 7. 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: A. Details of property B. Consideration received or accrued. C. Value adopted or assessed or assessable. | |
| FORM NO. 3CD – PART B | 15. Amounts admissible under sections - (a) 33AB (b) 33ABA (c) 33AC (wherever applicable) (d) 35 (e) 35ABB (f) 35AC (g) 35CCA (h) 35CCB (i) 35D (j) 35DD (k) 35DDA (l) 35E:- (a) debited to the profit and loss account (showing the amount debited and deduction allowable under each section separately); (b) not debited to the profit and loss account. | 15. Amounts admissible under sections – 32AC 33AB 33ABA 33AC Omitted 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 | |
| FORM NO. 3CD – PART B | 16(b) Any sum received from employees towards contributions to any provident fund or superannuation fund or any other fund mentioned in section 2(24)(x); and due date for payment and the actual date of payment to the concerned authorities under section 36(1)(va). | 20(b) Detail of contributions received from employees for various funds as referred to in section 36(1)(va). | |
| FORM NO. 3CD – PART B | (f) amounts inadmissible under section 40(a); | 21 (b) Amounts inadmissible under section 40(a):- (i) As payment to non-resident referred to in sub-clause (i) (A) Detail of payment on which tax is not deducted: (I) Date of payment (II) Amount of payment (III) Nature of payment (IV) Name and address of the payee (B) Detail of payment on which tax has been deducted but has not been paid during the previous year or in the subsequent year before the expiry of time prescribed under section 200(1) (I) Date of payment (II) Amount of payment (III) Nature of payment (IV) Name and address of the payee (V) Amount of tax deducted (ii) As payment to non-resident referred to in sub-clause (ia) (A) Detail of payment on which tax is not deducted: (I) Date of payment (II) Amount of payment (III) Nature of payment (IV)Name and address of the payee (B) Detail of payment on which tax has been deducted but has not been paid on or before the due date specified in sub-section (1) of section 139. (I) Date of payment (II) Amount of payment (III) Nature of payment (IV) Name and address of the payee (V) Amount of tax deducted (V)Amount out of (V) deposited, if any (iii) Under sub-clause (ic) [Wherever applicable] (iv) Under sub-clause(iia) (v) Under sub-clause(iib) (vi) Under sub-clause(iii) (I) Date of payment (II) Nature of payment (III)Name and address of the payee (vii) Under sub-clause(iv) (viii)Under sub-clause(v) | |
| FORM NO. 3CD – PART B | 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; Yes No (B) amount inadmissible under section 40A(3), read with rule 6DD [with break-up of inadmissible amounts; | 21(d) Disallowance/deemed income under section 40A(3) (A) On the basis of the examination of books of account and other relevant documents/evidence, whether the expenditure covered under section 40A(3) read with rule 6DD were made by account payee cheque drawn on a bank or account payee bank draft. If not, please furnish the details: (B) On the basis of the examination of books of account and other relevant documents/evidence, whether the payment referred to in section 40A(3A) read with rule 6DD were made by account payee cheque drawn on a bank or account payee bank draft. If not, please furnish the details of amount deemed to be the profits and gains of business or profession under section 40A(3A); | |
| FORM NO. 3CD – PART B | 19. Amounts deemed to be profits and gains under section 33AB or 33ABA or 33AC | 24. Amounts deemed to be profits and gains under section 32AC 33AB or 33ABA or 33AC. | |
| FORM NO. 3CD – PART B | - | 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. | |
| FORM NO. 3CD – PART B | - | 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. | |
| FORM NO. 3CD – PART B | 24(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. Yes No The particulars (i) to (iv) at (b) and the Certificate at (c) above need not be given in the case of a repayment of any loan or deposit taken or accepted from Government, Government company, banking company or a corporation established by a Central, State or Provincial Act; | 31(c) Whether the taking or accepting loan or deposit, or repayment of the same were made account payee cheque drawn on a bank or account payee bank draft based on the examination of books of account and other relevant documents The particulars (i) to (iv) at (b) and comment at (c) above need not be given in the case of a repayment of any loan or deposit taken or accepted from Government, Government company, banking company or a corporation established by a Central, State or Provincial Act; | |
| FORM NO. 3CD – PART B | - | 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. | |
| FORM NO. 3CD – PART B | - | 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. | |
| FORM NO. 3CD – PART B | - | 32(e) 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. | |
| FORM NO. 3CD – PART B | 26. Section-wise details of deductions, if any, admissible under Chapter | 33. Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, Section 10AA). | |
| FORM NO. 3CD – PART B | 27. (a) Whether the assessee has complied with the provisions of Chapter XVII-B regarding deduction of tax at source and regarding the payment thereof to the credit of the Central Government. Yes No (b) If the provisions of Chapter XVII-B have not been complied with, please give the following details*, namely:- Amount (i) Tax deductible and not deducted at all (ii) shortfall on account of lesser deduction than required to be deducted (iii) tax deducted late [ITR62;3CD,1]<1> Printed From (iv) tax deducted but not paid to the credit of the Central Government *Please give the details of cases covered in (i) to (iv) above. | 34(a). Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB, if yes please furnish details. (b) Whether the assessee has furnished the statement of tax deducted or tax collected within the prescribed time. If not, please furnish the details. (c) Whether the assessee is liable to pay interest under section 201(1A) or section 206C(7). If yes, please furnish details. | |
| FORM NO. 3CD – PART B | 29. In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form :— (a) total amount of distributed profits; (b) total tax paid thereon; (c) dates of payment with amounts. | 36. In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form :— (a)total amount of distributed profits; (b)amount of reduction as referred to in section 115-O(1A)(i) (c) amount of reduction as referred to in section 115-O(1A)(ii) (d)total tax paid thereon; (e) date of payment with amounts. | |
| FORM NO. 3CD – PART B | 30. Whether any cost audit was carried out, if yes, enclose a copy of the report of such audit [See section 139(9)]. | 37. Whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/item/quantity as may be reported/identified by the auditor. | |
| FORM NO. 3CD – PART B | 31. Whether any audit was conducted under the Central Excise Act, 1944, if yes, enclose a copy of the report of such audit. | 38. Whether any audit was conducted under the Central Excise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/item/quantity as may be reported/identified by the auditor. | |
| FORM NO. 3CD – PART B | - | 39. 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/quantity as may be reported/identified by the auditor. | |
| FORM NO. 3CD – PART B | - | 41. 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 alongwith details of relevant proceedings. |
(The author, Pardeep Kumar, is a Chartered Accountant from Rohtak, Haryana. He can be reached at pardeep.kumar2@escorts.co.in)
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