Tax Audit u/s. 44AB of
the Income Tax Act,
1961.
-BY C A M A H E N D R A S A N G H V I
Business Vs. Profession
2
 Section 2(13) : “Business includes any trade, commerce or
manufacture or any adventure or concern in the nature of
trade, commerce or manufacture”
 Section 2(36) : “Profession includes vocation”
 CIT Vs. Manmohan Das (1966) 59 ITR 699 (SC) : Profession involves



Intellectual skill or
Manual skill controlled by intellectual skill
Different than an operation which is substantially the production
or sale or arrangement for production or sale of commodities.
CA Mahendra Sanghvi
05th September,2015
Turnover
3
 The term ‘turnover’ for this clause may be interpreted to
mean the aggregate amount for which sales are effected or
services rendered by an enterprise.
 Where the business is covered by section 44AD or 44AE
and the assessee opts to be assessed under the respective
sections on presumptive basis, the turnover thereof shall be
excluded.
CA Mahendra Sanghvi
05th September,2015
Turnover
4
Nature
business
of What is Turnover
ICAI Guidance Note
(GN), 2014
Day
trader/ Sum total of differences, Para 5.14(a) of ICAI GN
speculator
whether positive or negative
Security
derivatives
transactions
Sum total of differences, Para 5.14(b) of ICAI GN
whether positive or negative,
also amount paid on premium
on sale of options
Commodity
derivatives
transactions
-In case of settlement without Para 5.14 (b) & (c) of
delivery,
sum
total
of ICAI GN
differences, whether positive or
negative
- in case of delivery, total value
of sales
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
5
CLAUSE 13
a. ------b. ------c. ------d. Details of deviation, if any, in the method of accounting employed in
the previous year from accounting standards prescribed under section 145 and
the effect thereof on the profit or loss.

As per the accounting standard (IT) – 2 any change in accounting
policy which has a “material effect” is required to be disclosed. And
change in the method of valuation of closing stock would amount to
change in accounting policy and needs to be suitably stated under
this clause.
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
6
CLAUSE 16
 Amounts not credited to the profit and loss account, being,-
a.) the items falling within the scope of section 28;
o any interest, salary, bonus, commission or remuneration, by whatever
name called, due to, or received by, a partner of a firm from such firm:
Provided that where any interest, salary, bonus, commission or
remuneration, by whatever name called, or any part thereof has not been
allowed to be deducted under clause(b) of section 40, the income under
this clause shall be adjusted to the extent of the amount not so allowed to
be deducted;
b.) -----c.) -----d.) any other item of income;
e.) Capital receipt, if any.
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
7
CLAUSE 17
 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
CA Mahendra Sanghvi
Consideration
received or accrued
Value adopted or
assessed or
assessable
05th September,2015
Clauses from 3CD Report
8
CLAUSE 18
 Particulars of depreciation allowable as per the Income tax Act, 1961 in
respect of each asset or block of assets as the case may be, in the following
form:(a) -----(b) -----(c) Actual cost or written down value, as the case may be;
(d) Addition / deductions during the year with dates; in the case of any
addition of an asset, date put to use including adjustments on account of i) -----ii) change in rate of exchange of currency, and
iii) subsidy or grant or reimbursement, by whatever name called.
(e) Depreciation allowable.
(f) -----CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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Depreciation on Intangibles
Item
License
of
collection”
Citation
Whether depreciation
allowable
“toll Ashoka Info. (P) Ltd –(2009) 22 DTR YES
60 (Pune) (trib)
Non-compete fees
Medicorp Technologies India Ltd. – YES
(2009) 30 SOT 506 (Mad) & ACIT vs.
GE Plastics India Ltd (ITAT
Ahmedabad) ITA no.483/Ahd/2007
Real Image - (2009) 120 TTJ 983 (Mad)
NO
Restrictive covenant – Srivastan Surveyors P. Ltd – (2009) YES
non-compete
to 318 ITR 283 (Mad) (AT)
director
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
10
Depreciation on Intangibles
Item
Citation
Whether depreciation
allowable
Brand Name
KEC International Ltd v/s YES
ACIT–unreported decision in
ITA No.4420/Mum/2009
Commercial Rights of ONGC VIDESH Ltd. – (2010) YES
exploration of mineral oil 33 DTR 22 (Trib)
Acquiring
skill
and BOSCH Ltd v/s CIT – YES
know-how of employees unreported decision in ITA
of business taken over
No. 329/Bang/09
Stock Exchange Card
CA Mahendra Sanghvi
CIT v/s Techno Shares and YES
Stocks Limited v/s CIT
[2010] 327 I.T.R. 323 (SC)
05th September,2015
Clauses from 3CD Report
11
Depreciation on Intangibles
Item
Citation
Goodwill
Hindustan
Coca
Cola YES
Beverages (P) Ltd. – (2009) 34
SOT 171 (Del)
Goodwill
Cit V. Smifs Securities Ltd YES
[2012] 24 taxmann.com 222
(SC)
CA Mahendra Sanghvi
Whether depreciation
allowable
05th September,2015
Clauses from 3CD Report
12
CLAUSE 19
 Amount admissible under sections:
Section
Amount debited to
profit & loss account
Amounts admissible as per the provisions of the Income-tax Act, 1961
and also fulfils the conditions, if any specified under the relevant 14
provisions of Income Tax Act.1961 or Income tax Rules,1962 or any
other guide-lines, circular, etc. issued in this behalf
33AB
-----
-----
33ABA
-----
-----
35(1)(i)
-----
-----
35(1)(ii)
-----
-----
35(1)(iia)
-----
-----
35(1)(iii)
-----
-----
35(1)(iv)
-----
-----
35(2AA)
-----
-----
35(2AB)
-----
-----
32AC
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 21
a) Please furnish the details of amounts debited to the profit and loss account,
being in the nature of capital, personal, advertisement expenditure etc.
Nature
Sr No.
Particulars
Amount in Rs.
-----
-----
-----
-----
-----
-----
-----
-----
-----
Capital expenditure
Personal expenditure
Advertisement expenditure in any
souvenir, brochure, tract, pamphlet
or the like, published by a political
party
Expenditure incurred at clubs being
entrance fees and subscriptions
Expenditure incurred at clubs being
cost for club services and facilities
used.
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
14
Nature
Sr No.
Particulars
Amount in Rs.
Expenditure by way of penalty or fine
for violation of any law for the time
being 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
CA Mahendra Sanghvi
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Clauses from 3CD Report
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CLAUSE 21
(b) Amounts inadmissible under section 40(a):(i) as payment to non-resident referred to in sub-clause (i)
(ii) as payment referred to in sub-clause (ia)
(iii) ----(iv) ----(v) ----(vi) ----(vii) ----(viii)----(c) ---------(d) ---------(e) ---------CA Mahendra Sanghvi
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Clauses from 3CD Report
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CLAUSE 21
(f) ---------(g) ---------(h) 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;
(i) amount inadmissible under the proviso to section 36(1)(iii)
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 26
 In respect of any sum referred to in clause (a), (b), (c), (d), (e) or (f) of section
43B, the liability for which;(A) pre-existed on the first day of the previous year but was not allowed in the
assessment of any preceding previous year and was;
(B) was incurred in the previous year and was ;
-----------------------------------
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 27
(a). Amount of Central Value Added Tax credits availed of or utilised during the
previous year and its treatment in the profit and loss account and treatment of
outstanding Central Value Added Tax credits in the accounts.
(b). Particulars of income or expenditure of prior period credited or debited to the
profit and loss account.
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 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.
S.No.
Name of the
person from
which shares
are received
CA Mahendra Sanghvi
PAN of the
person, if
available
Name of
the
company
whose
shares are
received
CIN of the
Company
No. of
shares
received
Amount of
considerat
ion paid
Fair
Market
value of
shares
05th September,2015
Clauses from 3CD Report
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CLAUSE 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.
S.No.
Name of the person
from whom
consideration
received for issue of
shares
CA Mahendra Sanghvi
PAN of the
person, if
available
No. of shares
issued
Amount of
consideration
received
Fair Market
value of
shares
05th September,2015
Clauses from 3CD Report
21
CLAUSE 31
(a)*Particulars of each loan or deposit in an amount exceeding the
limit specified in section 269SS taken or accepted during the previous
year:(i) name, address and permanent account number (if available with the
assessee) of the lender or depositor;
(ii) amount of loan or deposit taken or accepted;
(iii) whether the loan or deposit was squared up during the previous
year;
(iv) maximum amount outstanding in the account at any time during
the previous year;
(v) whether the loan or deposit was taken or accepted otherwise than
by an account payee cheque or an account payee bank draft
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
22
CLAUSE 31
(b)*Particulars of each repayment of loan or deposit in an amount
exceeding the limit specified in section 269T made during the previous
year:(i) name, address and permanent account number (if available with the
assessee) of the payee;
(ii) amount of the repayment;
(iii) maximum amount outstanding in the account at any time during
the previous year;
(iv) whether the repayment was made otherwise than by account payee
cheque or account payee bank draft;
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 31
(c) Whether the taking or accepting loan or deposit, or repayment of the
same were made by account payee cheque drawn on a bank or account
payee bank draft based on the examination of books of account and
other relevant documents;
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 32
(a). Details of brought forward loss or depreciation allowance, in the following
manner, to the extent available:
Serial
Assessment
Number Year
CA Mahendra Sanghvi
Nature of
Amount as
loss/allowan returned(in
ce(in rupees) rupees)
Amounts as Remarks
assessed(gi
ve reference
to relevant
order)
05th September,2015
Clauses from 3CD Report
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CLAUSE 32
(b). ----------(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.
(d). ----------(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.
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 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:
Tax deduction
Section
and collection
Account Number
(TAN)
CA Mahendra Sanghvi
Nature of
payment
Total
Total
Total amount Amount
amount of amount on on which tax of tax
payment or which tax was
deducted
receipt of was
deducted or or
the nature required collected at collected
specified in to be
specified rate out of (6)
column (3) deducted out of (5)
or
collected
out of (4)
Total
Amount
amount of tax
on which deducted
tax was or
deducted collected
or
on (8)
collected
at less
than
specified
rate out
of (7)
Amount of
tax deducted
or collected
not
deposited to
the credit of
the Central
Government
out of (6)
and (8)
05th September,2015
Clauses from 3CD Report
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CLAUSE 34
(b). whether the assessee has furnished the statement of tax deducted or tax
collected within the prescribed time. If not, please furnish the details:
Tax deduction and
collection Account
Number(TAN)
CA Mahendra Sanghvi
Type of Form
Due Date
furnishing
Date of furnishing
if furnished
Whether the
statement of tax
deducted or
collected contains
information about
all transactions
which are
required to be
reported
05th September,2015
Clauses from 3CD Report
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CLAUSE 34
(c). whether the assessee is liable to pay interest under section 201(1A) or section
206C(7). If yes, please furnish:
Tax deduction and
collection Account
Number(TAN)
CA Mahendra Sanghvi
Amount of interest
under section
201(1A)/206C(7) is
payable
Amount paid out of
column (2) along with
date of payment
05th September,2015
Clauses from 3CD Report
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CLAUSE 37
 Whether any cost audit was 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.
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 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/value/quantity as may be reported/identified by the auditor.
CA Mahendra Sanghvi
05th September,2015
Clauses from 3CD Report
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CLAUSE 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.
S.No.
Financial
Year to
which
demand/r
efund
relates to
CA Mahendra Sanghvi
Name of
other Tax
Law
Type(Dem
and
raised/
Refund
received)
Date of
demand
raised/ref
und
received
Amount
Remarks
05th September,2015
32
CA Mahendra Sanghvi
05th September,2015