Prepared By

Naman Shah
Give the following particulars of the capital
asset converted into stock-in-trade

 Description of capital asset

 Date of acquisition
 Cost of acquisition
 Amount at which the asset is converted
into stock-in- trade
 Such conversion is treated as transfer u/s 2(47)
 U/s 45(2) notional capital gain arises from such transfer and
chargeable to tax in the year in which such stock-in-trade is
sold.
 No requirement of details of taxability of ‘capital gain’ or
‘business income’ from such deemed transfer.
 Accounting standards to be followed:
o AS-2 for valuation of stock-in-trade
o AS-10 for valuation of fixed assets.
o AS-22 for provision of Income Tax as temporary timing
difference.
 Sec 47 & 47A are also to be considered.
Amounts not credited to the Profit and Loss Account,
being,—
a) The items falling within the scope of Section 28.
b) The Performa credits, drawbacks, refund of duty of
customs or excise or service tax or refund of sales
tax, or Value Added Tax where such credits,
drawbacks or refunds are admitted as due by the
authorities concerned.
c) Escalation claims accepted during the Previous Year;
d) Any other item of income;
e) Capital receipt, if any.
f) In the following format:

Description Amount
 Where any land or building or both is transferred
during the previous year for a consideration less than
the 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
 Consideration received or accrued
 Value adopted or assessed or assessable
Issues/ Points to be considered..….
 For reporting requirement: The value adopted or assessed
or assessable, if the property is registered, obtain a copy
of the registered sale deed. If the property is not
registered, verify relevant documents from relevant
authorities or obtain third party expert like lawyer,
solicitor representation to satisfy the compliance of Sec.
43CA/ 50C. And in case unable to obtain relevant
documents then state the same through an observation in
the report under Form 3CA/CB.
 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 forms:-
a) Description of asset/ block of assets.
b) Rate of Depreciation (in percentage)
c) actual cost or written down value, as the case may be.
d) Additions/deductions during the year with dates; in the
case of any addition of an asset, date to put to use;
Date of addition/deductions, Particulars, Amount, In
case of addition- date put to use. In case of deduction-
NA
Adjustments on account of
i. Central Value Added Tax credit claimed and allowed
under the central Excise Rule,1994 in respect of assets
acquired on or after 1st march,1994
ii. Change in the rate of exchange of currency, and
iii. Subsidy or grant or reimbursement, by whatever name
called.
d) Depreciation allowable
e) Written down value at the end of the year.
 Amounts admissible under Sections

 Section
 Amount debited to profit and 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 provisions of Income Tax
Act, 1961 or Income Tax Rules, 1962 or any other
guidelines, circular, etc., issued in this behalf.
List of Sections…..
Section Amount debited to P&L Amounts
Account/Payment admissible/Quantum
of deduction

32AC Investment in new plant & 15% of actual cost of

machinery new asset
33AB Tea Development sum= amount or
aggregate of amounts
so deposited; OR
Sum= 40% of profits
of business;
whichever is least
33ABA Site Restoration Fund: Deposit in Sum=amount or
ministry of petroleum & natural aggregate of amounts
gas for extraction etc so deposited; OR
Sum= 20% profits of
business; whichever
is least
 List of Sections…..
Section Amount debited to P&L Amounts
Account/Payment admissible/Quantum of
deduction

35(1)(i) Revenue expenditure in respect of 100% of the expenditure

scientific research related to the
business

35(1)(ii) Amount paid to research association 100% of amount

which has as its object the contributed (from A.Y.
undertaking of scientific research or 2021-22)
to a university, college or other 150% of amount
institution notified & approved by contributed (from A.Y.
CG to be used for scientific research 2018-19 till A.Y. 2020-21)
175% of amount
contributed (from A.Y.
2011-12 till A.Y. 2017-18)
125% of amount
contributed (till A.Y. 2010-
11)
 List of Sections…..
Section Amount debited to P&L Amounts
Account/Payment admissible/Quantum of
deduction

35(1)(iia) Amount paid to an approved 100% of amount paid

company registered in India to (from A.Y. 2018-19)
be used for scientific research & 125% of amount paid
development (from A.Y. 2009-10 till
A.Y. 2017-18)
35(1)(iii) Amount paid to research 100% of amount paid
association which has as its (from AY 2018-19)
object the undertaking of 125% of amount paid
research in social science or (upto A.Y. 2017-18)
statistical research OR to a
university, college or other
institution notified & approved
by CG to be used for research in
social science or statistical
research
List of Sections…..
Section Amount debited to P&L Amounts
Account/Payment admissible/Quantum
of deduction

35(1)(iv) Capital expenditure on scientific 100% of capital

research other than o n acquisition expenditure incurred
of land, related to the business
carried on by the assessee, such
deduction as may be admissible
under the provisions of sub-Section
(2)
35(2AA) Amount paid to National Laboratory 100% of amount paid
or a University or an Indian Institute (from A.Y. 2021-22
of Technology or a specified person onwards)
with a specific direction to use such 150% of amount paid
amount for scientific research (from A.Y. 2018-19 till
undertaken under a programme A.Y. 2020-21)
approved by the prescribed 200% of amount paid
authority (from A.Y. 12-13 till
A.Y. 2017-18)
List of Sections…..
Section Eligible expenditure/payment Amount/quantum of
deduction
35(2AB) Expenditure on scientific research 100% of expenditure
on in-house research and incurred (from A.Y.
development facility as approved 2021-22 onwards)
by the prescribed authority 150% of expenditure
From A.Y. 2012-13 : By a company incurred (from A.Y.
engaged in business of bio- 2018-19 till A.Y.
technology or business of 2020-21)
manufacture/ production of any 200% of expenditure
article or thing other than incurred (from A.Y.
specified in Eleventh. 2011-12 till A.Y.
Upto A.Y. 2011-12: Company 2017-18)
engaged in business of
manufacture or production of any
drugs, pharmaceuticals, electronic
equipments, computers,
telecommunication equipments,
chemicals or any other article or
thing notified by board.
List of Sections…..
35ABB Capital Expenditure on License fees paid before
license to operate commencement of business:
telecommunication License fee paid / No. of years
services from the previous year of
commencement of business to the
previous year in which license
expires.

License fees paid after

commencement of business:
License fee paid / No. of years
from the previous year in which
license fee actually paid to the
previous year in which license
expires.
List of Sections…..
35AC Payment to public sector 100% of expenditure
Co. or local authority or an (No deduction allowed from A.Y.
association or institution 2018-19 onwards)
approved by national
committee for carrying
eligible Projects/Schemes
List of Sections…..
35AD Deduction in 100% - laying/setting up/ building/
respect of capital developing/ operating cross country natural
expenditure on gas pipeline/ a new hotel in India/ a
specified business housing project under slum rehabilitation
scheme/ inland container depot or freight
station/ bee-keeping & production of honey
& bee-wax/ warehouse facility for sugar/
slurry pipeline for transportation of iron ore
(w.e.f. A.Y. 2015-16)/ wafer fabrication
manufacturing unit (w.e.f. A.Y. 2015-16)
150% – setting up/ laying/ building/
operating a cold chain facility/ warehousing
facility for agriculture produce/a new
hospital with at least 100 beds/ a housing
project under affordable housing scheme/
production of fertilizer in India
From A.Y. 2018-19 onwards, 100% of
expenditure.
List of Sections…..

35CCA Rural development programme 100% of expenditure

carried on by association &
institutions
35CCB Conservation of Natural resources 100% of expenditure
by associations & institutions***
Deleted from A.Y 2003-04
35CCC Expenditure on agricultural 100% of expenditure
extension project (from A.Y. 2021-22
onwards)
150% of expenditure
(till A.Y. 2020-21)
35CCD Expenditure on skill development 100% of expenditure
project by a Company (from A.Y. 2021-22
onwards)
150% of expenditure
(till A.Y. 2020-21)
List of Sections…..
35D Amortization of Preliminary (1/5)* expenditure
Expenses by Indian resident or For each of the 5
Company successive P.Y.
beginning with P.Y.
in which business
commences or
extension is
completed or new
unit commences
production/
operation
35DD Amortization of Expenditure in case (1/5)* expenditure
of amalgamation or demerger For each of the 5
incurred by an Indian company successive P.Y.
beginning with P.Y. in
which amalgamation
or demerger takes
place
List of Sections…..
35DDA Amortization of expenditure (1/5)* amount
incurred under Voluntary deducted in
Retirement Scheme computing
profits/gains of
business for P.Y. ;&
Balance shall be
deducted in equal
installments for each
of the 4 succeeding
P.Y.
35E Expenditure on prospecting or (1/10)* expenditure
extraction or production of certain For each of 10
minerals successive P.Y.
 Any Sum Paid to the Employee as bonus or
commission for the services rendered , where
such sum otherwise payable to him as profits
or dividend .[ Sec 36(1)(ii)]

Description Amount
 Details of Contributions received from
employees for various funds as referred to in
section 36(1)(va):
 Serial No.
 Nature of Fund
 Sum Received from Employees
 Due Date for Payment
 The actual amount paid
 The actual date of payment to the concerned
authorities
 Please furnish the details of amounts debited
to the profit and loss account, being in the
nature of capital, personal, advertisement
expenditure etc.
 1. Expenditure of capital nature;
 2. Expenditure of personal nature;
 3. Expenditure on advertisement in any souvenir,
brochure, tract, pamphlet or the like, published by a
political party;
 4. Expenditure by way of penalty or fine for
violatation of any law for the time being in force
 5. Expenditure by way of any other penalty
or fine not covered above
 6. Expenditure incurred for any purpose
which is an offence or which is prohibited by
law
 amounts inadmissible under section 40(a);
 Section 40(a)(i)

 Any Interest , royalty , Fees for technical services or

other sums chargeable under this act , Which is Payable
1. outside india or
2. in India to a Non Resident not being a company or to a
foreign company.
On which the tax is deductible at source under the
Chapter XVII-B and such tax has not been deducted or
after deduction has not been paid during the previous
year or in the subsequent year before the expiry of the
time prescribed u/s. 200(1)
 Amounts debited to Profit and Loss Account
being interest, salary, bonus, commission or
remuneration inadmissible under section
40(b)/40(ba) and computation thereof:-
 Disallowance/deemed income under section
40A(3)
 A. On The basis of examination of books of
accounts 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
accountpayee bank draft. If not, please
furnish the details.
 B.On The basis of examination of books of
accounts and other relevant
documents/evidence, whether the
expenditure covered under 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
or gains of business or profession under
section 40A(3A):-
 provision for payment of gratuity not allowable
under sec.40A(7).
 Section 40A(7)
 a). No deduction shall be allowed in repect of any
provision made by the assessee for the payment of
gratuity to his employees on their retirement or on
termination of their employment for any reason.
 b). Nothing in Clause (a) shall apply in realtion to
any provision made by the assessee for the purpose
of the payment of a sum by way of any
contribution towards an approved gratuity fund or
for the purpose of payment of any gratuity has
become payable during the previous year.
 any sum paid by the assessee as an employer
not allowable under section 40A(9);
 Section 40A(9)
 No Deduction shall be allowed in respect of any sum
paid by the assessee as an employer towards the
setting up or formation of or as contribution to any
fund , trust , company, association of persons , body
of individuals , society under the society Registration
act 1860 or other institution for any purpose except
where such sum is paid for the purpose and to the
extent provided by or as required by or under any
other law for the time being in force.
 particulars of any liability of a
contingent nature.
 Here we have to disclose the liability which
are contingent in the Nature and the
information for the same would be collected
from the Management.
 Amount of deduction inadmissible in terms of
sec. 14A in respect of the expenditure
incurred in relation to income which does
not form part of the total income;
 It is the Duty of the assessee to provide
details of the amount inadmissible u/s. 14A
for the examination to the Auditor. The Tax
auditor may place reliance on the
management representation.
 amount inadmissible under the proviso to
sec. 36(1)(iii)
 Section 36(1)(iii)
 The amount of interest paid of capital
borrowed for the purpose of B&P shall be
allowed as the deduction.
 Interest for the Period that the asset was not
put to use will not be allowed as the
deduction.
 Amount of interest inadmissible under
section 23 of the Micro,Small and Medium
Enterprises Development Act, 2006.

 The tax Auditor needs to report the amount

of the interest inadmissible under Section 23
of the MSMED Act ,2006 irrespective of
whether the amount of such interest has
been debited to profit and loss account or
not.
 Particulars of payments made to persons
specified under Section 40A(2)(b).
 Following disclosure should be made with
respect to this section

 Name of the Party

 Relation
 Nature of Payment
 Amount in Rs.
 Any Payment made by the AOP to his Member
for supply of goods should be reported
 Specific Person means relative , Partners ,
Members , Directors or Persons having
Substantial interest.