The purpose of the audit report is to summarize the findings in a way that auditee management can readily understand and see the impact of these findings. The audit report represents the end result of weeks of reviews, analyses, interviews and discussions. It provides important information to audit clients about the area reviewed by internal audit.

More importantly, it provides details to management about significant issues that need to be addressed. How well internal auditors communicate that information is critical to getting their client’s acceptance of findings and their agreement with audit recommendations.

Read more: Quality Audit Reports - Inform and Influence clients

Section  37 of the Income Tax Act, 1961 (‘Act’) provides for deduction of revenue expenditure incurred, not being personal expenses and not being those covered by provisions of  Section 30 to 36 of the Act, wholly and exclusively for the purpose of the business or profession against income chargeable under the head Profits and Gains from Business or Profession.

Finance Act (No.2) 2014 has inserted Explanation 2 to the Section 37 which provides that any expenditure incurred by the assessee on the activities[1] relating to Corporate Social Responsibility (‘CSR’) referred to in Sec 135 of the Companies Act, 2013 shall not be deemed to incurred for the purpose of business or profession.

Read more: Interesting Issues - CSR Expenditure

Introduction:

Traditionally, it was a well-accustomed practice under the Indirect Tax laws viz. Excise, Service Tax and VAT laws that interest is payable on the amount of tax due after adjustment of the input tax credit, that remains unpaid by the due date. Coming to GST laws, the said practice got dented under the concept of ‘Electronic Credit Ledger’, ‘Electronic Cash Ledger’ and ‘Electronic Liability Ledger’ and offsetting the liabilities with amounts in cash and credit ledgers through GSTR-3B returns. Recently, the Principal Commissioner, Hyderabad has issued a Standing Order No. 01/2019 dated 04.02.2019 to clarify that interest is payable on gross liability including on the portion of the liability that was adjusted using the accumulated Input Tax Credit (‘ITC’). In this context, let us go through the statutory provisions and legal principles laid down by courts on this issue and accordingly understand the nuances of the clarification given in the said order.

Read more: Interest Payable Under Gst - Whether Compensatory Or Complementary To Revenue

Genesis:

          Finance Act, 2012 with effect from 01.04.2013 has introduced a new sub-section to Section 56 (2) of Income Tax Act, 1961 (for brevity ‘Act’). The new sub-section (viib) taxes any amount which is received by a company from any person who is resident, any consideration for issuance of shares that exceeds the face value of shares, the aggregate consideration received for such shares as exceeds the fair market value (for brevity ‘FMV’) of the shares. Section 56(2)(viib) will apply to such companies in which public are not substantially interested.

Read more: Angel Tax – Genesis, Problem, Relief, Conclusion & Way Forward