dear members
i have a client (Say Mr. A) who has a Commission
Income of about 1 to 2 lacs (Shown as Business Income)
and Income from other sources shown in his personal
books every year.
He is also a sole proprietor of X & Co. where he
imports, exports, manufactures and trades in goods.
Separate books are maintained for X & Co. (total
turnover below 40 lacs every year including commision
income)
This year his sales has crossed audit limit for the
first time. Thus, I am auditing X & Co's accounts.
Following are my queries.
1) Commission is his business income, but shown in
personal books. So, it will nowhere come in X & Co.'s
books. Then, what will be the scope of my audit? will
I have to cover his personal books also?
2) Also, in annexure 1 to form 3CD, will gross
turnover include commission?.
3) Further, in annexure 1 to form 3CD, in the column
"amount of taxes paid / provided for in books". What
should I mention?(No provision is made in X & Co. and
all taxes paid are from his personal accounts)
4) All the loans exceeding Rs. 20,000/-, although used
for business (one can say that because there are no
much assets in his personal books except capital
balance in X & Co.) are shown in his personal accounts
(all old loans, but addition and repayment is there).
will I have to report the same in 3CD?
5) Whether I have to report any personal income under
clause 13(a) or 13(e) of form 3CD? (business income /
other income not credited to P & l A/c)
please advise
dipesh
skip to main |
skip to sidebar
This Group consist of few members to discuss the tax related matters
Blog Group
Important Links
Blog Archive
Links
QUOTES OF THE DAY
"Thinking should become your capital asset, no matter whatever ups and downs you come across in your life." -- Abdul Kalam
3 comments:
Since we are auding the books of X & co only, we
are concern only with x & co. assessee can have
any other proprietry concern also but we as
auditor are not concern with that hence the scope
of aur audit is only restriced to X & co. only.
further this can be clarified by way of note
Annexure 1 to form 3CD will include turnover of
of X & co only
since so provision for taxes are made in x & co
the provision for taxes made should be Nil
Only loans taken in business should be reported
in 3CD. Loan taken in personal capacity should
not be reported even though the same has been
utilsed for the purpose of business
you dont have to report any person income under
clause 13 howerever you should clarify by note in
clause 13 that the income is subject to the books
of account of X & co
Dinesh Doshi
I disagree with dineshbhai. The audit is qua an assessee. If i am running two business and one business is 30lacs and other 20 lacs will i be not liable for audit ? i will be so, we r auditing business is wrong.
The comm need not be shown as turnover but it will be taken as business income.
The amount if utilised for business and interest is being paid and claimed from the income it will form part of tax audit report as per my view
I have put my comment on this and in my query i have made out some issues pl revert back
bye
vikram
Vikram bhai / Dipesh
What u said is absolutely right, audit is qua assessee and not qua business, But however the scope of audit will be limited to auditors assignement.
If assessee has got two concerns one in Mumbai and another in Delhi then there will be two different auditors their scope will be limited to the concerns alloted to them, in such case which auditor will report on personal income ?
But however receipts in personal accounts if shown as business income will be subject to audit. this can be treated as seprate assignement.
In the above case if the one audit in Mumbai is completed and filed with department in time. But however the other audit report in Delhi could not be completed in time then according to me penalty should be levied only on the Delhi turnover, and not on Mumbai turnover.
In the same way personal receipt shown as business income can only be subject to penalty if not subjected to audit.
In the above case if the assessee is liable to audit because of his proprietory concern/ concerns, but instead of comission income he has receied share of profit and remuneration from the firm in which he is partner. Share of profit is exempt but however remuneration is taxable as business income, whether this remuneration will be subject to audit ? This remuneration is already subjected to tax in partnership firm
Dinesh
Post a Comment