Tax Audit Report Clause 32(a) - Brought forward loss or Depreciation Allowance
Clause 32: Details of Brought Forward Loss or Depreciation Allowance
Clause 32(a) - Details of brought forward loss or depreciation allowance, in following
manner
Clause 32(a) has been revised to encompass situations where the taxpayer opts for options under sections 115BAC, 115BAD, or 115BAA, alongside the existing provisions of this clause. Here are the key points to consider:
- If the taxpayer chooses to pay income tax under the new tax regime (section 115BAC) or section 115BAD (for Resident Co-operative Society), or section 115BAA (for companies), this clause captures relevant details.
- When a taxpayer exercises one of these options, set-off of carried forward loss or unabsorbed additional depreciation is disallowed. Such instances must be reported in this clause.
- Losses carried forward can relate to various income heads (e.g., house property income, business or profession profits, speculation business, capital gains) covered by sections 32 (depreciation) and 70 to 79.
- The remarks column should include information about pending assessments, appellate proceedings, or delay in filing loss returns.
- The auditor should meticulously examine past assessment records, returns, orders, and appeals to verify the accuracy of information provided in this clause.
- Section 80 and 139(3) should be taken into account. Section 80 states that losses not determined through a return filed under section 139(3) (belated return) cannot be carried forward for set-off purposes under certain sections.
- Considerations should also be given to sections 71B (Carry Forward and Set-off of Loss from House Property) and 78 (Change in Constitution of Firm or on Succession).
- Pending assessment, rectification, revision, or appeal proceedings should be disclosed in the remarks column, along with details of consequential orders if applicable.
- Verify case status and demands through the IT Department's e-portal, if available.
- Obtain management representation regarding carried forward losses and depreciation details.
- Remember that sections 78 and 79 restrictions do not affect the set-off of unabsorbed depreciation (governed by section 32(2)).
- In cases where restrictions apply (e.g., section 78/79), report them along with remarks about the restriction's impact on carry forward.
- Update next year's reporting based on the carry forward losses that are not carried forward due to restrictions under sections 78/79.
This comprehensive approach ensures accurate and compliant reporting while considering all relevant legal provisions. Staying well-informed about the latest tax regulations is key, and seeking advice from qualified tax professionals or Chartered Accountants is recommended for precise reporting.