Tax Audit Checklist on Clause 24 of Form 3CD Under the Income Tax Act, 1961

Clause 24 of Form 3CD requires tax auditors to report amounts deemed to be profits and gains under Sections 32AC, 32AD, 33AB, 33ABA, and 33AC. The reporting in this clause focuses solely on factual data but the tax auditor must use professional judgment to assess whether any violations of these sections resulting in deemed profits occurred during the previous year.

This provision applies to assesses engaged in manufacturing or production in notified backward areas of Andhra Pradesh, Bihar, Telangana or West Bengal who acquired and installed new plant and machinery between 01-04-2015 and 31-03-2020 and claimed deductions under Section 32AD. It also covers those involved in growing and manufacturing tea, coffee or rubber in India as well as those engaged in petroleum or natural gas exploration under an agreement with the Central Government.

The tax auditor is not required to report any capital gains arising from the transfer of assets for which a deduction Under section 32AD on the actual cost of such asset has been claimed or from the transfer of assets acquired from deposits Under section 33AB “NABARD deposit”, Section 33ABA “deposit with SBI or Site restoration fund deposit” for which a deduction has been claimed.

In this story, we provide a detailed discussion of the tax audit checklist pertaining to clause 24 of Form 3CD.

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