Recent changes in form 3CD - Tax Audit Report U/s 44AB of Income Tax Act, 1961

Changes in form 3CD
DK Bholusaria | dk@bholusaria.com

Major Changes
 Annexure I and Annexure II removed.
 Many details will have to be furnished in comprehensive,
tabular and analytical forms (formats as per e-utility given
legal force).
 Elaborate information and analysis in various tables will have
to be furnished.
 Adverse reports, qualifications from various other audit
reports will have to be given by the tax auditor, instead of
merely annexing such reports till now.
 TDS compliance reporting has been totally revamped and
made comprehensive.
 Certain provisions of IT Act which are in force but were not
covered in earlier format, have been covered now (Eg., new
clause 17).
08/09/2014DK BHOLUSARIA

Major Changes
 ITR forms also synced in tune with new 3CD.
 Now you can easily identify if audit has been done pursuant
to 44AD/44AF – Long pending demand of profession.
 All difference of opinions / disclaimers / qualifications /
limitations with regard to different of clauses of form 3CD
has to be specifically brought out in clause 3 of form 3CA or
clause 5 of form 3CB now – New requirement.

New v/s old
Bird’ eye view of changes

New v/s old clause – Clause 1 ~ 12
Brief description of clause New
Clause #
Old
Clause #
Changes
Name 1 1 No Change
Address of assessee 2 2 No Change
PAN of assessee 3 3 No Change
Registration under indirect taxes 4 - New clause*
Status 5 4 No Change
Previous year 6 5 Cosmetic
Assessment year 7 6
Relevant clause of 44AB 8 - New clause*
Firm / AOP / Partner’s details 9 7 Clarificatory Change in sub
clause (b)*
Nature of business 10 8 No change
Books of accounts / other records
and addresses
11 9 Lots of changes*
Presumptive Income in P&L 12 10 Practically no change (Chapter
XII-G and First Schedule specifically added to
list.)

Clause #
Old
Clause #
Changes
Method of accounting 13 11 No Change
Method of valuation of closing stock 14 12 No Change
Conversion of capital asset into stock
in trade
15 12A No Change
Amounts not credited to the profit and
loss account
16 13 No Change
Assets covered u/s 43CA and 50C 17 - New clause*
Depreciation allowable 18 14 No Change
Amounts admissible under various
sections
19 15 List of sections
enlarged*
Payment of bonus/commission u/s
36(1)(ii) and Employee’s contribution
to various funds u/s 36(1)(va)
20 16 Change in the way
transactions are
reported in sub-
clause (b).*

New v/s old clause – Clause 21
Clause #
Old
Clause #
Changes
Amounts debited to the profit and loss
account in the nature of capital,
personal, advertisement expenditure
etc.
21(a) 17(a~e) Clubbed in one sub-
clause.
Amounts inadmissible under section
40(a)
21(b) 17(f)
&
27 (b)(i)
&
27 (b)(iv)
Each sub-clause of
section 40(a) to be
separately reported*
Amount inadmissible under section
40(b) / 40(ba) & computation thereof
21(c) 17(g) No change
Amount inadmissible under section
40A(3) and 40A(3A)
21(d) 17(h) Certificate from
assessee dispensed
with. 40A(3A) reporting
is new requirement*
Gratuity u/s 40A(7), sum u/s 40A(9),
Contingent nature liability, Section
14A and Section 36(1)(iii)
21
(e~f)
17
(i ~ m)
No change

Clause #
Old
Clause #
Changes
Interest inadmissible under MSMED 22 17A No change
Particulars of payments made to
persons specified u/s 40A(2)(b)
23 18 No change
Amounts deemed to be profits and
gains u/s 32AB, 32AC or 33ABA or
33AC
24 19 New section 32AC
added
Any amount of profit chargeable to tax
u/s 41 and computation thereof
25 20 No change
Sums u/s 43B 26 21 No change
CENVAT and prior period
income/expenditures
27 22 MODVAT renamed as
CENVAT
Deemed income u/s 56(2)(viia) 28 - New clause*
Deemed income u/s 56(2)(viib) 29 - New clause*
Amount borrowed on hundi u/s 69D 30 23

Clause #
Old
Clause #
Changes
Loans or deposits taken/accepted
u/s 269SS
31(a) 24(a) No change
Loans or deposits repaid
u/s 269SS
31(b) 24(b) No change
Whether assessee certificate
obtained regarding account payee
cheque or an account payee bank
draft
- 24(c) Assessee certificate no
more required.
Now responsibility
shifted to auditor.
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.
31(c) -

New v/s old clause – Clause 32 & 33
Clause #
Old
Clause #
Changes
Details of brought forward loss /
unabsorbed depreciation
32 (a) 25 (a) No change
Carry forward of loss due to change in
shareholding of a closely held
company u/s 79
32 (b) 25 (b) No change
Details of speculation loss u/s 73 32 (c) - New clause
Details of loss u/s 73A for specified
businesses u/s 35AD
32 (d) - New clause
(read clause 19 also)
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
32 (e) - New clause
Deduction under chapter VI-A and
Chapter III (section 10A and 10AA)
33 26 Chapter III added.

Clause #
Old
Clause #
Changes
Whether the assessee is required* to
deduct or collect tax as per the
provisions of Chapter XVII-B or XVII-
BB. If yes, Tax auditor to provide kind
of TDS compliance statement in a
specified table format
34 (a) 27(a)
&
27
(b)(ii)
TCS also added
Back door entry of form
24C after 5 years*.
If the assessee has not furnished the
TDS/TCS return within the due date,
provide complete list of all such
returns
34 (b) - New clause*
Stringent requirements
of reporting
If assessee is liable to pay interest u/s
201(1A) or section 206C(7), tax
auditor to furnish details of interest
and its payment
34 (c) 27
(b)(iii)
New clause*

Clause #
Old
Clause #
Changes
Quantitative details of principal items
of traded goods, raw materials,
finished products etc.
35 28 No change
Details of tax on distributed profits
under section 115-O
36 29 Amount of reduction as
referred to in section
115-O(1A)(i)/(ii) to be
additionally given
If any cost audit / audit under CEA /
Service tax audit u/s 72A of FA 1994
was carried out during the year, then
tax auditor have to give details of
disqualification or disagreement on
any matter / item / value / quantity as
may be reported / identified by the
respective special auditor.
37, 38
and
39
(new
clause)
30 and
31
Instead of copy of report,
now auditor has to
provide all qualified /
adverse aspects of
cost audit / excise
audit / service tax audit
report.

Clause #
Old
Clause #
Changes
Major ratios 40 32 Computation no more
required
Previous year figures
also to be given
Only for Principal Items
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
along with details of relevant
proceedings
41 - New clause

Clause by clause
discussion
(key clauses)

Icons for reference in succeeding slides
Icon Represents
What clause says?
What to look for?
What to collect / documentation?
What / how to report?
This is a new requirement


Clause 4
Registration under indirect tax laws

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.
Clause 4 – Registration under indirect tax laws


a. Central VAT - Service tax & Central Excise
b. Custom duty
c. Central Sales tax
d. State VAT / State Excise
e. Professional tax
f. Luxury tax
g. Entertainment tax
h. Entry tax
Clause 4 – Example of indirect taxes

a. Ascertain if any business activity of assessee is
liable to any kind of Central or State Indirect Tax
b. Auditor to at least have basic knowledge of various
indirect tax laws as to when such laws become
applicable.
c. In case of doubts suggest assessee to take proper
legal opinion.
d. Check applicability of respective tax laws to each
division/location/branch, if applicable.

a. Management representation letter.
b. Written legal opinion(s) of lawyer / Chartered
Accountant.
c. Copy of registration certificates / any other
documentary proof of registration

SL # Type of Indirect Tax
or Name of statute
Name of
branch/unit, if
applicable
Registration /
Identification Number,
if taken
Remarks
1 Service Tax Corporate office AAACA9999A SD001
2 Service Tax X Division AAACA9999A SD002
3 Service Tax Y Division AAACA9999A SD003
4 Central Excise Duty X Division AAACA9999A XD001
5 Central Excise Duty Y Division AAACA9999A XD002
6 Delhi Value Added Tax Y Division 07871345678
7 Haryana Value Added Tax X Divison 07876930951
8 Custom Duty Corporate office AAACA9999A FT001
Sample reporting
 In case the auditee is registered with more than one department or have
more than one identification number allotted for the same, all such numbers
are to be mentioned.

Clause 8
Relevant clause of section 44AB under which
audit conducted

Indicate the relevant clause of section 44AB under
which the audit has been conducted.
Clause 8 – Relevant clause of section 44AB

The relevant clauses of section 44AB are as follows:
Section 44AB(a) – Business > 1 cr turnover
Section 44AB(b) – Profession > 25 lakh turnover
Section 44AB(c) – 44AF / 44B / 44BB
Section 44AB(d) – 44AD
You just need to ascertain relevant clause and report
it.

Clause 9 (b)
Change in Profit sharing ratio

If there is any change in the partners or members or in
their profit sharing ratio since the last date of the
preceding year, the particulars of such change.
 Change cosmetic and clarificatory in nature.
Clause 9 (b) – Change in Profit sharing ratio
For the purpose of above reporting, the auditor needs
to examine the instrument of partnership i.e.
“Partnership Deed” for firms.
In case of LLPs, LLP Agreement as well as LLP-form 3,
4 and 4A also needs to be checked and documented.

Clause 11
Books of accounts and other records

(a) Whether books of account are prescribed under section 44AA, if
yes, list of books so prescribed. (old clause)
(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.}
a) List of books of account and nature of relevant documents
examined.
Clause 11 – Books of accounts and other records


 Section 2(1)(12A) - “Books” or “Books of account”
(1) ledgers,
(2) day-books,
(3) cash books,
(4) account books
(5) and other books,
 For certain professions, Board has prescribed Form
C vide Rule 6F of the Rules

If an auditor:
refers to and examine for the purpose of the audit
any document which is not covered in the above
definition of books of account / prescribed books of
accounts,
he shall be obliged to report the nature of such
document which is relevant for the audit

a. Take a list of all locations / branches / businesses
covered by audit of assessee. You may also refer to
various registration certificates to ascertain this
information.
b. Check if assessee is maintaining centralised
accounting or branch accounting.
c. If assessee has more than one businesses and
separate books of accounts are maintained for
each business, prepare a list of each such
business(es) and its location.
d. Prepare an index of each key type of documents /
records , which has been relied by you in support of
the particulars given in clauses 12 to 41 for Form
No. 3CD

S. No.
Location
identifier
Full address of Location
1 HO 211-212, Amba Towers, Sector 9, Rohini, Delhi 110 085
2 After market
division
211-212, Amba Towers, Sector 9, Rohini, Delhi 110 085
3 Chassis
Division
240, Udyog Vihar, Phase - I, Gurgaon 122 012
4 EoU Division 62, Chimes Building, Sector 44, Gurgaon 122 002
List of locations where books of accounts and other records
are maintained.

S. No. Particulars Location at
which
maintained
Whether
maintained
in a
computer
system?
Whether
Examined
?
Remarks
1 Cash book / Bank book All Yes Yes
2 General ledger / Journal All Yes Yes
3 Debtors and creditors
ledger
All Yes Yes
4 Fixed assets register All Yes Yes
5 Payroll records HO Yes Yes
Books of accounts maintained and examined
Other records examined:
Such other registers, vouchers and relevant documents and records in
support of the particulars given in clauses 12 to 41 for Form No. 3CD.
Note: The books of account are maintained on a computer system. The books of
account listed above and the other regular reports can be generated by the system
by defining the fields based on the type of books, data, records and extent of details
required.

Clause 17
Assets covered u/s 43CA and 50C

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:
(1) Details of property
(2) Consideration received or accrued
(3) Value adopted or assessed or assessable.
 Corresponding changes carried out in ITR as well
Clause 17 – Assets covered u/s 43CA and 50C


Clause 17 – Assets covered u/s 43CA or 50C
 Section 43CA applicable from AY 2014-15.
 Assessee engaged in real estate business of sale and
purchase (i.e. stock-in-trade) of land or building or
both is covered by this section
 Date of transfer is the key to this clause, consideration
actually received is not.
 Auditor should ascertain assessed/assess value as per
respective authority/state govt.
 Where any advance/part consideration received (other
than in cash) prior to date of agreement, only date of
agreement is relevant for the purpose {Sec 43CA (3) /
(4))}

a. Take copy of agreement to sale and/or registered
sale deed.
b. If assessed value/ assessable value not mentioned
on registered deed, appropriate evidence for value
like money receipt issued by registration authority.
c. In case of section 43CA(3), of any dispute arise on
value, safer to take written opinion.
d. Management representation is must in all cases
e. While reporting, do give reference of document(s)
on which reliance has been placed
f. Reporting to be made in format specified in clause
itself.
Clause 17 – Assets covered u/s 43CA or 50C

Clause 19
Amounts admissible under various section

Clause 19 – Amounts admissible under various section
Section
No.
Debited to
P&L account
Deduction
admissible*
32AC
33AB
33ABA
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
*Deduction admissible as per the
provisions of the Income Tax Act, 1961
and also fulfils the conditions, if any
specified under the the conditions, if
any specified under the relevant
provisions of Income Tax Act, 1961 or
Income Tax Rules,1962 or any other
guidelines, circular, etc., issued in this
behalf.
 No more required to disclose
amount not debited to the profit
and loss account under above
sections.
 Section 33AC deleted
 Section 35 divided into sub-
clauses

Clause 20
Contribution to various funds u/s 36(1)(va)

Clause 20(b) – Contribution to various funds u/s 36(1)(va)
(b) Details of contributions received from employees
for various funds as referred to in section
36(1)(va):
1) Serial number
2) Nature of fund
3) Sum received from employees
4) Due date* for payment
5) The actual amount paid
6) The actual date of payment to the concerned
authorities
* As per explanation to the clause (va), the “due date” means the
relevant date under the Act, rule, order, notification, standing order,
award, contract of service or otherwise of the relevant fund

Clause 20(b) – Contribution to various funds u/s 36(1)(va)
New reporting
Fields
Old reporting fields
(e-filing utility)
Remarks
Nature of fund Name of fund
Sum received from
employees
Amount
Now we have to
report both
amount received
and depositedThe actual amount paid
Due date for payment Due Date
The actual date of
payment to the
concerned authorities
Actual date

Clause 21(a) – Amounts debited to the P&L.
(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 Serial
Number
Particula
rs
Amt (in
₹)
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 subscription
for club services and facilities used.
Expenditure incurred at clubs being cost for club
services and facilities used
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

Clause 21(b) – Amounts inadmissible under section 40(a)
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)* {TDS}
iii. under sub-clause (ic) [Wherever applicable] {FBT}
iv. under sub-clause (iia) {Wealth Tax}
v. under sub-clause (iib) {Applies to state PSUs}
vi. under sub-clause (iii)
i. date of payment
ii. amount of payment
iii. name and address of the payee
vii. under sub-clause (iv)
viii.under sub-clause (v) {Tax paid on expat Salaries}
* Separately discussed

Clause 21(d) – Disallowance / deemed income u/s 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 :{old clause}
(1) Serial number
(2) Date of payment {New field}
(3) Nature of payment
(4) Amount
(5) Name and Permanent Account Number of the payee, if available
{New field}
(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):
(1) Serial number
(2) Date of payment
(4) Amount
(5) Name and Permanent Account Number of the payee, if available


Clause 21(d) – Comparison with old clause
Earlier Now
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;
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

Clause 21(d) – Guidance note of ICAI
2005 Edition
when certificate was not required
2013 edition
When certificate was required
Quote
“…there may be practical difficulties in
verifying of payments made through
crossed cheques or bank drafts. If no
proper evidence for such verification of
the payment by crossed cheque of draft
is available, such a fact could be brought
out by appropriate comments in the
following manner:
It is not possible for me/us to verify
whether the payments in excess of
Rs. 20000/- have been made
otherwise than by crossed cheque or
bank draft, as the necessary evidence
is not in the possession of the
assessee…”
Unquote
• Since after obtaining certificate
from assessee such disclaimer
was no more required, thus
• ICAI withdrew the observations
and guidance note from 2005
edition
 The observation and the
guidance note of the 2005 edition
should be followed in view of
revised clause.

The assessee has not made any payment for expenses
incurred covered by section 40A(3) read with Rule 6DD in
excess of sums exceeding Rs. 20000/- or Rs. 35000/-, as
the case may be, in cash, except as mentioned in Form
3CD.Though as per our examination of the books of account
and relevant record such payments have been made by
cheques or bank drafts, yet it could not be verified by us
conclusively as to whether all such payments were made by
account payee cheques or account payee bank drafts, as it
is not practically possible, since there are no satisfactory
evidence or material with the assessee for such verification
except bank statements.
Clause 21(d) – Suggested disclaimer

Clause 28 and 29
Deemed income u/s 56(2)(viia)/(viib)

Clause 28 and 29 – Deemed income u/s 56(2)(viia)/(viib)

28. Whether during the previous year
- the assessee {firm and closely held company}
- 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
29. Whether during the previous year
- the assessee {closely held company}
- received any consideration {basically share premium}
- 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.

Sl# Date of
transaction
/ transfer
Name of
Transferor
/
Name of
company of
which
equity
shares are
being
transferred
Value of
transaction/
considerati
on
FMV of
shares
Clause 28 and 29 – Suggested reporting format
Sl# Date of
transaction
/ allotment
Name of
share
holder
Value of
transaction
FMV of shares
Clause 28
Clause 29

TDS compliance tree and reporting
Default
reporting
Clause 34(a)
TDS not
deducted
Clause 21
(b)(i)(A) or
21(b)(ii)(A)
TDS deducted
TDS Deducted
/ Deposited late
Clause 34(c)
Not paid before
due date u/s
139(1) / 200(1)
Clause
21(b)(i)(B) or
21(b)(ii)(B)
TDS return
reporting
All returns filed
on time
Nothing to
report
Any return filed
late
Clause 34(b)
Not
required
Nothing to
report
Deduction part
reporting
Required to
deduct / collect
TDS/TCScompliancetree

Clause 21 (b)(i)(A) / 21(b)(ii)(A) – TDS not deducted
(b) Amounts inadmissible under section 40(a):-
(i) as payment to non-resident referred to in sub-clause (i)
(A)Details of payment on which tax is not deducted:
i. date of payment
iii. nature of payment
iv. name and address of the payee
…
…
(ii) as payment referred to in sub-clause (ia)
(A)Details of payment on which tax is not deducted
i. date of payment

Clause 21 (b)(i)(B) / 21(b)(ii)(B) – TDS deducted but not deposited
(b) Amounts inadmissible under section 40(a):-
(i) as payment to non-resident referred to in sub-clause (i)
(A) Details 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
v. amount of tax deducted
…
(ii) as payment referred to in sub-clause (ia)
(A) Details 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
v. Amount of tax deducted
vi. Amount out of (v) deposited, if any

Clause 34(b) – TDS returns compliance
whether the assessee has furnished the statement of tax deducted or
tax collected within the prescribed time. If not, please furnish the
details:
(1) Tax deduction and collection Account Number (TAN)
(2) Type of Form
(3) Due date for furnishing
(4) Date of furnishing, if furnished
(5) Whether the statement of tax deducted or collected contains
information about all transactions which are required to be reported
a. Make a list of all TANs assessee has.
b. Make a list of all returns (for each TAN and quarter), assessee is
required to file, with due date and actual date of filing. NIL returns are
not required to be filed!
c. Do not forget to take copy of all PRs from assessee as audit evidence.
d. Wherever returns are filed late, report in clause 34(b)


Clause 34(b) – TDS returns compliance
SL # TAN Type of Form Due date for
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
1 DELD01234F 24Q 15/12/2013 17/12/2013 Yes
2 DELD01234F 26Q 15/12/2013 17/12/2013
No. Transporter details on
which TDS was not
deducted u/s 194C (6) were
not reported
3 RTKD9765X 27Q 15/05/2014 - NA
4 MUMD9211F 27EQ 15/05/2014 18/05/2014 Yes
Sample reporting

Clause 34(c) – Interest payable u/s 201(1A)/206C(7)
Whether the assessee is liable to pay interest under section 201(1A) or
section 206C(7). If yes, please furnish:
(1) Tax deduction and collection Account Number (TAN)
(2) Amount of interest under section 201(1A) / 206C(7) is payable
(3) Amount paid out of column (2) along with date of payment.
a. All cases of late deduction as well late payments (and even non-
deduction) are covered by reporting under this clause.
b. Irrespective of payment of interest, reporting has to be made.
c. You may download Aggregated TDS Compliance report from TRACE.
Aggregated TDS Compliance report will list down all the TAN's with
defaults mapped to a deductor's PAN.
d. Special emphasis should be given to incorrect date of
payments/deduction reported in TDS returns


Clause 34(c) – Interest payable u/s 201(1A)/206C(7)
SL # TAN Amount of interest
under section
201(1A) / 206C(7) is
payable
Amount paid
out of column
(2) along with
date of
payment.
Remarks
1 DELD01234F ₹ 15750
₹ 15750
dated
15/12/2013
For 26Q
2 DELD01234F ₹ 7000
₹ 7000
dated
15/12/2013
For 27Q
3 DELD01234F ₹ 2345 Not paid For 27Q
4 MUMD9211F ₹ 1435
₹ 1000
Dated
14/11/2013
For 27EQ
Sample reporting

Clause 34(a) – TDS/TCS compliance statement
(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:
(1) Tax deduction and collection Account No. (TAN)
(2) Section
(4) Total amount of payment or receipt of the nature specified in column (3)
(5) Total amount on which tax required to be deducted or collected out of
(4)
(6) Total amount on which tax was deducted or collected at specified rate
out of (5)
(7) Amount of tax deducted or collected out of (6)
(8) Total amount on which tax was deducted or collected at less than
specified rate out of (7)
(9) Amount of Tax deducted or collected on (8)
(10)Amount of Tax deducted or collected not deposited to the credit of the
Central Government out of (6) and (8)


 In 2009 Government had made unsuccessful attempt
to bring in form 24C – TDS compliance statement
through notification no. 31/2009 dated 25th March
2009 read with circular no. 02/2009.
 This statement is exact copy of form 24C (except 1
field)
 This is the very statement which all TDS AO
invariably demands during proceedings u/s 201 {TDS
Survey}
 It’s a more or less reconciliation of your PL with your
TDS/TCS returns.
 If assessee is not covered by TDS/TCS provisions at
all – No need to jump into this clause.

Let’s understand this with example:
Amount (₹)
Total Interest outgo A 1.00 cr
Total amount paid below threshold limit B 0.30 cr
Balance (A-B) C 0.70 cr
Total amount for which 15G/15H recd. D 0.20 cr
Balance (C-D) E 0.50 cr
Total amount covered by sec. 197 @ 1% F 0.20 cr
Balance (E-F) G 0.30 cr
TDS not deducted H 0.01 Cr
Balance (G-H) I 0.29 Cr
TDS on I … 20 Lakhs @ 10% J 2.90 Lakhs
TDS on F … 20 Lakhs @ 1% K 0.20 Lakhs

Clause 34(a) – Suggested disclosure (per erst. 24C)
TAN (1) DELD09763X
Section (2) 194A
Nature of payment (3)
Interest other than
interest on securities
Total amount of payment or receipt of the nature
specified in column (3)
(4) 1,00,00,000 A
Total amount on which tax was required to be
deducted or collected out of (4)
(5) 70,00,000 C
Total amount on which tax was deducted or
collected at specified rate out of (5)
(6) 29,00,000 I
Amount of tax deducted or collected out of (6) (7) 2,90,000 J
collected at less than specified rate out of (7)
(8) 40,00,000 D+F
Amount of tax deducted or collected on (8) (9) 20,000 K
Amount of tax deducted or collected not deposited
to the credit of the Central Govt. out of (6) and (8)
(10) Nil

Clause 34(a) – Suggested disclosure (second school of thought)
TAN (1) DELD09763X
Section (2) 194A
Nature of payment (3)
Interest other than
interest on securities
Total amount of payment or receipt of the nature
specified in column (3)
(4) 1,00,00,000 A
Total amount on which tax was required to be
deducted or collected out of (4)
(5) 50,00,000 C
collected at specified rate out of (5)
(6) 49,00,000 F+I
Amount of tax deducted or collected out of (6) (7) 3,10,000 J
collected at less than specified rate out of (7)
(8) 1,00,000 H
Amount of tax deducted or collected on (8) (9) Nil K
Amount of tax deducted or collected not deposited
to the credit of the Central Govt. out of (6) and (8)
(10) Nil

Suggested disclaimer
on clause 34(a)

In column (4) of Clause 34(a) of Form No. 3CD "total
amount of payments of the nature specified in column (3)"
has been mentioned to the extent it was possible; out of
which the aggregate "amount on which tax was not required
to be deducted" in view of any exemption / deduction
allowable under the respective section or the payment being
below the threshold provided or the assessee has obtained
Permanent Account Numbers (PAN) of the payee u/s
194C(6) etc., as the case may be, has been reduced to
derive the amount on which tax was required to be deducted
for reporting in column (5) of Clause 34(a) of the Form No.
3CD.
Clause 34(a) – Suggested disclaimer # 1

Though the assessee has made available the books of account,
necessary records and relevant documents for the purpose of our
examination for reporting the particulars in Clause 34(a) of Form
No. 3CD, however, keeping in view the scope of section 194C of
the Income Tax Act,1961 and considering the volume of payments
covered in section194C it is not possible to prepare and compile
the "total amount of payment of the nature specified in column (3)".
It is not out of place to mention that on most of the payments made
for carrying out "work' in pursuance of "a contract" no tax is
required to be deducted in view of the threshold provided in sub-
section (5) and the provisions of sub-section (6) of section 194C.
Therefore, in column (4) of Form No. 3CD the aggregate amount
as declared in the quarterly statements of tax deducted at source
furnished in Form No. 26Q has been reported.
Clause 34(a) – Suggested disclaimer # 2

Clause 40 – Ratios
Details regarding turnover, gross profit, etc., for the previous year and
preceding previous year:

SL# Particulars Previous
year
Preceding
previous year
1 Total turnover of the assessee
2 Gross profit / turnover
3 Net profit / turnover
4 Stock-in-trade / turnover
5 Material consumed / finished
goods produced
(The details required to be furnished for principal items of goods
traded or manufactured or services rendered)

Clause 40 – Guidance note of ICAI
a) Gross Profit: The excess of the proceeds of goods sold and services
rendered during a period over their cost, before taking into account
administration, selling, distribution and financing expenses. When the
result of this computation is negative it is referred to as gross loss.
b) Turnover: The aggregate amount for which sales are effected or services
rendered by an enterprise. The terms gross turnover and net turnover (or
gross sales and net sales) are sometimes used to distinguish the sales
aggregate before and after deduction of returns and trade discounts.
c) Net Profit: The excess of revenue over expenses during a particular
accounting period. When the result of this computation is negative, it is
referred to as net loss. The net profit to be shown here is net profit before
tax.
d) The term `stock-in-trade' used therein does not include stores and spare
parts or loose tools. The term “stock-in-trade” would include only finished
goods and would not include the stock of raw material and work-in-
progress since the objective here is to compute the stock-turnover ratio

Credits
This presentation would not have been possible without inputs
from:
CA. Rajiv Kumar Jain
(rajivkjain0608@gmail.com)

Recent changes in form 3CD - Tax Audit Report U/s 44AB of Income Tax Act, 1961

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