TAX AUDIT U/S 44AB UNDER INCOMR TAX ACT

Tax Audit u/s 44AB- An Assessee is liable to get his Tax Audit done by a Chartered Accountant mandatorily, if in the previous year,

1.      The Person is carrying on business and his Total Sales/Turnover exceeds Rs. 1 Crore (Limit increased wef 1^st April 2012) or

2.      The Person is carrying on Profession, and his Gross Receipts* exceed Rs. 25 Lakhs (Limit increased wef 1st April 2012) or

3.      The Person is carrying on business or profession and is covered under the provisions ofsection 44AD, 44AE, 44AF, 44BB or 44BBB and claims that his income from the said business is lower than the deemed profits and gains computed under the relevant section.

*ICAI has further clarified that the amount received from the following items shall not be included while computing the Total Sales/Total Turnover/ Gross Receipts:-

§  Sale Proceeds of Fixed Assets

§  Sale Proceeds of Assets held as Investments

§  Rental Income

§  Income by way of Interest unless assessable as Business Income

§  Any expense which is reimbursable to the Agent by the Client

Form required in compliance of Sec.44AB-

1.      Form 3CA & Form 3CD- These Forms are used in case where the Accounts of the business or profession of a person have already been audited under any other Law. (Download excel utility for efiling tax audit report in Form 3CA & Form 3CD)

2.      Form 3CB & Form 3CD– These Forms are used in case where the Accounts of the business or profession have not been audited earlier.

Due Date of filing Tax Audit Report- The Due Date of filing the Tax Audit Report under Section 44AB is 30^th September of the Assessment Year. However, for AY 2014-15 the due date for filing Tax Audit Report has been extended from 30th Sept 2014 to 30th Nov 2014 (Notification No. 133/24/2014).

Penalty for Non-compliance of Sec.44AB- Non Compliance of the provisions of this act shall attract Penalty under section 271B of the Income Tax Act. If any person required to get his audit done under section 44AB fails to do so before the specified date shall be liable for penalty of ½% of the turnover/gross receipts subject to a maximum penalty of Rs. 1,50,000.

However, Section 273B states that no penalty shall be levied under section 271B if there is a reasonable cause for such failure. Some instances which have been accepted by the Tribunals/Courts as “Reasonable Cause” are:-

1.      Resignation of the Tax Auditor and Consequent Delay

2.      Death or physical inability of the partner in charge of the Accounts

3.      Labour Problems such as strikes, lock-outs for a long period

4.      Loss of Accounts because of Fire/Theft etc. beyond the control of the Assessee

5.      Natural Calamities

Revision of Tax Audit Report- Tax Audit Report efiled cannot be revised under normal circumstances. However, in case the Accounts are revised in the following circumstances, the Audit Report efiled can also be revised:-

1.      Revision of Accounts of a Company after its adoption in the Annual General Meeting

2.      Change in Law with Retrospective effect

3.      Change in Interpretation of Law (e.g.: CBDT Circular, Notifications, Judgements etc.)

In case the Tax Audit report efiled is revised, the Auditor shall state that it’s a Revised Report and shall also state the reasons for the same.

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Intimation to Registrar of Companies

Any foreign company can establish its place of business in India by filling Form FC-1 (Documents delivered for registration by a foreign company). The eForm has to be digitally signed by authorized representative of the foreign company.

There is no need to apply and obtain DIN for Directors of a foreign company but the DSC of the authorized representative is mandatory, which again is not required to be registered on MCA Application

1) Foreign companies which, establish a place of business within India are required to deliver the e-form FC-1 along with the following documents as attachments, to the Registrar of Companies within thirty days of the establishment of the place of business, for registration—

— Charter, statutes or memorandum and articles of association or other instrument constituting or defining the constitution of the company is to be attached. If the same is not in English language then it should be translated copy in English language.

— Details of individuals’ directors are to be attached. Details should contain name, surname, former name-if any, residential address, occupation and other directorship, if any.

— Approval letter from Reserve Bank of India for the setting up of business in India is to be attached,

— Power of attorney or board resolution in favour of the authoritsed representatives is to be attached.

— Director’s details—in case of body corporate, details containing name and complete address of body corporate.

— Secretary details—if any.

(The form will be digitally signed by the authorized representative of the foreign company)

(2) The details of directors, Secretary and body corporate should contain the following particulars, that is to say:

(a) with respect to each director—

(i) In the case of an individual,

Ø  his present name and surname in full,

Ø  any former name or names and surname or surnames in full,

Ø  his usual residential address, his nationality, and if that nationality is not the nationality of origin,

Ø   his nationality of origin, and

Ø  his business occupation, if any, or if he has no business occupation but holds any other directorship or directorships, particulars of that directorship or of some one of those directorships;

(ii) In the case of a body corporate,

Ø  its corporate name and

Ø  registered or principal office; and the full name, address,

Ø  nationality and nationality of origin, if different from that nationality of each of its directors;

(b) With respect to the secretary, or where there are joint secretaries with respect to each of them—

(i) in the case of an individual, his present name and surname, any former name or names and surname or surnames, and his usual residential address; and

(ii) In the case of a body corporate, its corporate name and registered or principal office:

(Provided that, where all the partners in a firm are joint secretaries of the company, the name and principal office of the firm may be stated instead of the particulars mentioned in clause (b) of this sub-section.)

INFORMATION REUIRED FOR FILING FC-1

S. NO.	PARTICULARS	DETAILS (to be filled by clients)
1	Name of the foreign company
2	I SO code of the country where the foreign company is registered
3	Full address of registered or principal office of foreign company
4	Telephone number with ISD Code
5	email Id of the foreign company
6	Date of establishment of principal place of business in India
7	Type of Office
8	Address of the principal place of business in India (INCLUDING Telephone number & email id)
9	Main division of business activity to be carried out in India
10	Details of other places of business in India (if any)
11	Particulars of place(s) of business in India established on any earlier occasion(s) other than above (if any)
12	Details of the one or more person(s) resident in India and authorized to accept on behalf of the foreign company service of process and any notices or other documents required to be served on the foreign company
13	Details of the permission obtained from any Authority (along with copy of approval letter)
14	Whether the parent company is in operation at the time of making this application	Yes              or            No
15	Whether there is any winding up proceedings is pending against the parent company	Yes              or            No
16	Details of subsidiary, holding or associate companies in India of the foreign company or of any subsidiary or holding company of such foreign company or of any firm in India in which such foreign company or its holding or subsidiary company is a partner
17	Details of the persons, firms or companies in India which shall be deemed to be the `related party', within the meaning of clause 76 of section 2 of the Act, of the foreign company or of any subsidiary or holding company of such foreign company or of any firm in which such foreign company or its subsidiary or holding company is a partner
18	Whether the company is falling under section 379* of the Companies Act, 2013	Yes   No

Notes

• Section 379. Where not less than fifty per cent. of the paid-up share capital, whether equity or preference or partly equity and partly preference, of a foreign company is held by one or more citizens of India or by one or more companies or bodies corporate incorporated in India, or by one or more citizens of India and one or more companies or bodies corporate incorporated in India, whether singly or in the aggregate, such company shall comply with the provisions of this Chapter and such other provisions of this Act as may be prescribed with regard to the business carried on by it in India as if it were a company incorporated in India.

Attachments

• Certified copy of the charter, statutes, or memorandum and articles of the company or other instrument constituting or defining the constitution of the company; (duly certified by the directors of the company)

• L ist of directors and secretary of the foreign company; authorized representative(s);

• Power of attorney or board resolution in favor of the

• Reserve bank of India approval letter

• Optional attachment(s), (if any)

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DIRECT TAX: PROFESSIONAL UPDATES FOR THE 4th WEEK OF AUGUST 2014, BY RAJPUT JAIN & ASSOCIATES TEAM

• E-file Wealth Tax Returns with digital signature for those assesses who are liable to get accounts audited under section 44AB from assessment year 2014-2015. In other cases Individuals/HUF can file also file returns manually for the assessment year 2014-2015, if no Tax Audit [IT Notification No. 32/2014 dated 23-06-2014].
• Revised TDS returns to be accepted without original provisional receipts w.e.f. 01.06.2014 [Circular No: NSDL/TIN/2014/024]. 
•  The provisions of section 269SS of the Income Tax Act does not gets attracted where the amount is transferred to a loan account in the form of book entry [CIT vs. Worldwide Township Projects Ltd., High Court of Delhi] 
• CBDT Press Release dated 04th July, 2014: One mobile number or email ID can now be used for 10 Income Tax Accounts. 
•  Company and an assessee being individual or HUF is liable to audit u/s 44 AB are required to furnish FORM BB (Return of Net Wealth) electronically under digital signature for assessment year 2014-15 and onwards [Notification No. 32/2014 dated 23/06/2014] 
•  ITAT : Penalty on 'wrong' but 'bonafide' claim not maintainable; Sec. 271(1)(c) penalty quashed Suzuki Motorcycle India Ltd. [TS-375-ITAT-2014(DEL)] 
•  ITAT: Grants Sec 244A interest on self-assessment tax paid pre return filing P.N. Writer & Co. Pvt. Ltd. 
•  ITAT: Genuine business loss set-off allowed against 'Sec 69 addition' despite no ROI claim (Jignesh V. Sheta)
• Income tax - Whether provisions of Sec 153C allow the AO to invoke it casually and need not record any satisfaction - NO: Bombay HC (Mumbai, June 24) 
•  Important announcement for Tax payers for updating contact details in e-Filing Portal. 
• One mobile number or email ID can be used for a maximum of 4 user accounts as the Primary Contact- Mobile Number and Email ID in e-Filing. 
• ITAT: Immovable property for Sec 194LA TDS includes 'structure', not merely 'land' (Greater Hyderabad Municipal Corporation) 
•  ITD relaxes requirement of 1 mobile number and e-mail ID for maximum 10 assesses in PAN login instead of 4. Give CA mobile and e-mail in secondary contact. 
•  Disallowance u/s. 40(a) (ia) of the Income Tax Act applies only to amounts payable as of 31st March [Supreme Court In CIT vs. Vector Shipping Services(P) Ltd]. 
•  Today (07-07-2014) is last day for deposit TDS/TCS. Do not deduct TDS on ST portion of bill. 
•  HC: Charitable society's Sec 10(23C) exemption rejection can't result in 'Sec 12A registration' cancellation (Sisters Of Our Lady Of Providence Education Society)  
• SC : Dismisses Revenue SLP; "Bonafide" mistake due to law change can't attract Sec. 271(1)(c) penalty ChittorgarhKendriyaSahakari Bank Limited [TS-409-SC-2014] 
• 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.

• Deduction u/s 10A / 10AA available to Software/ IT enabled business on transfer of upto 20% of technical staff to a new SEZ in first year [Circular 12 of 18-07-2014].
• Today (31-07-2014) is last date for filing ITR/WTR by salaried and other non-audit cases. E-filing mandatory for income above 5 lacs. Paper WTR for non-audit cases
• The existing Form No. 3CA, Form No. 3CB and Form No. 3CD have been substituted vide notification no. 33/2014 dated 25.07.2014 with immediate effect.
• The Globalca Team has requested to the CBDT for extension of due date i.e. 31.07.2014, for filing the Income Tax Return by salaried & other non-audit assessees, as the ITD portal is very slow & people are unable to e-file   their ITRs. 

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