Question ID : 39349

INCOME TAX DEBITED TO PROFIT AND LOSS ACCOUNT

WHERE HAS INCOME TAX DEBITED TO PROFIT AND LOSS ACCOUNT TO BE REPORTED IN TAX AUDIT REPORT IN FORM 3CD.

Answer ID : 79121

In my opinion income tax paid should not be passed through PL a/c.Provision for Income Tax can be debited.So if the "INCOME TAX"in question has been paid and debited to reduce profit it should be reported in 3CD.

Answer ID : 79122

Only current year provision can be debited to profit & Loss account. If it is related to payment of income tax, it should be reported in Form 3CD as prior period item.

Answer ID : 79136

Hi Mr. Darshak, Income tax debited to statement of profit and loss would not be allowed as deduction by virtue of section 40(a)(ii) of the Income tax Act, 1961. It may be noted that Clause 21 of the Form 3CD does not include disallowance under section 40(a)(ii). Therefore, it is appropriate to provide your observation in Form 3CA/3CB itself referring to clause 21 of the Form 3CD.

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