1. - BY CA MAHENDRA SANGHVI Tax Audit u/s. 44AB of the Income Tax Act, 1961.

2. Business Vs. Profession 05th September,2015 CA Mahendra Sanghvi 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. 2

3. 05th September,2015 CA Mahendra Sanghvi 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. 3 Turnover

4. 05th September,2015 CA Mahendra Sanghvi 4 Turnover Nature of business What is TurnoverICAI Guidance Note (GN), 2014 Day trader/ speculator Sum total of differences, whether positive or negative Para 5.14(a) of ICAI GN Security derivatives transactions Sum total of differences, whether positive or negative, also amount paid on premium on sale of options Para 5.14(b) of ICAI GN Commodity derivatives transactions -In case of settlement without delivery, sum total of differences, whether positive or negative - in case of delivery, total value of sales Para 5.14 (b) & (c) of ICAI GN

5. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 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. 5

6. 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. Clauses from 3CD Report CA Mahendra Sanghvi 05th September,2015

7. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 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: 7 Details of PropertyConsideration received or accrued Value adopted or assessed or assessable

8. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 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) ------ 8

9. 05th September,2015 9 Depreciation on Intangibles Clauses from 3CD Report CA Mahendra Sanghvi ItemCitationWhether depreciation allowable License of “toll collection” Ashoka Info. (P) Ltd –(2009) 22 DTR 60 (Pune) (trib) YES Non-compete feesMedicorp Technologies India Ltd. – (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) YES NO Restrictive covenant – non-compete to director Srivastan Surveyors P. Ltd – (2009) 318 ITR 283 (Mad) (AT) YES

10. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 10 Depreciation on Intangibles ItemCitationWhether depreciation allowable Brand NameKEC International Ltd v/s ACIT–unreported decision in ITA No.4420/Mum/2009 YES Commercial Rights of exploration of mineral oil ONGC VIDESH Ltd. – (2010) 33 DTR 22 (Trib) YES Acquiring skill and know-how of employees of business taken over BOSCH Ltd v/s CIT – unreported decision in ITA No. 329/Bang/09 YES Stock Exchange CardCIT v/s Techno Shares and Stocks Limited v/s CIT [2010] 327 I.T.R. 323 (SC) YES

11. 05th September,2015 CA Mahendra Sanghvi 11 Clauses from 3CD Report Depreciation on Intangibles ItemCitationWhether depreciation allowable GoodwillHindustan Coca Cola Beverages (P) Ltd. – (2009) 34 SOT 171 (Del) YES GoodwillCit V. Smifs Securities Ltd [2012] 24 taxmann.com 222 (SC) YES

12. 05th September,2015 CA Mahendra Sanghvi 12 CLAUSE 19  Amount admissible under sections: Clauses from 3CD Report SectionAmount 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 32AC 33AB----- 33ABA----- 35(1)(i)----- 35(1)(ii)----- 35(1)(iia)----- 35(1)(iii)----- 35(1)(iv)----- 35(2AA)----- 35(2AB) -----

13. Clauses from 3CD Report 05th September,2015 13 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. CA Mahendra Sanghvi NatureSr No.ParticularsAmount 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. -----

14. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 14 NatureSr No.ParticularsAmount 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

15. 05th September,2015 CA Mahendra Sanghvi 15 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) ---------- Clauses from 3CD Report

16. 05th September,2015 CA Mahendra Sanghvi 16 Clauses from 3CD Report 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)

17. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 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 ; ------------------ 17

18. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 18 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.

19. 05th September,2015 CA Mahendra Sanghvi 19 Clauses from 3CD Report 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 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

20. 05th September,2015 CA Mahendra Sanghvi 20 Clauses from 3CD Report 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 PAN of the person, if available No. of shares issued Amount of consideration received Fair Market value of shares

21. 05th September,2015 CA Mahendra Sanghvi 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 Clauses from 3CD Report

22. 05th September,2015 CA Mahendra Sanghvi 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;

23. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 23 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;

24. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 24 CLAUSE 32 (a). Details of brought forward loss or depreciation allowance, in the following manner, to the extent available: Serial Number Assessment Year Nature of loss/allowan ce(in rupees) Amount as returned(in rupees) Amounts as assessed(gi ve reference to relevant order) Remarks

25. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 25 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.

26. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 26 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 and collection Account Number (TAN) SectionNature of payment Total amount of payment or receipt of the nature specified in column (3) Total amount on which tax was required to be deducted or collected out of (4) Total amount on which tax was deducted or collected at specified rate out of (5) Amount of tax deducted or collected out of (6) Total amount on which tax was deducted or collected at less than specified rate out of (7) Amount of tax deducted or collected on (8) Amount of tax deducted or collected not deposited to the credit of the Central Government out of (6) and (8)

27. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 27 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) Type of FormDue 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

28. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 28 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) Amount of interest under section 201(1A)/206C(7) is payable Amount paid out of column (2) along with date of payment

29. Clauses from 3CD Report 05th September,2015 CA Mahendra Sanghvi 29 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.

30. 05th September,2015 30 Clauses from 3CD Report CA Mahendra Sanghvi 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.

31. 05th September,2015 31 Clauses from 3CD Report CA Mahendra Sanghvi 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 Name of other Tax Law Type(Dem and raised/ Refund received) Date of demand raised/ref und received AmountRemarks

32. 05th September,2015 32 THANK YOU CA Mahendra Sanghvi