Tax Audit Checklist on Clause 18 of Form 3CD Under Income Tax Act, 1961

Clause 18 of Form 3CD mandates the tax auditor to determine the allowable amount of depreciation after considering all matters listed in sub-clauses (a) to (d). According to Explanation 5 below section 32(1)(ii), depreciation under sub-section (1) must be allowed regardless of whether the assessee has claimed a deduction for it in computing their total income. Therefore, this clause applies to all assessees eligible for depreciation, irrespective of their claims in the income computation.

However, this clause does not require the tax auditor to indicate whether depreciation has been charged in the books of account. Information regarding unabsorbed depreciation, as per Section 32(2), is not required under this clause because it is covered under Clause 32(a) of Form 3CD. Therefore, details of unabsorbed depreciation should be furnished under Clause 32(a).

In this story, a comprehensive checklist specifically created for Clause 18 of Form 3CD, aimed at aiding tax auditors in efficiently carrying out tax audits in accordance with this clause.

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