Form 3AE, Download Income Tax Form 3AE in PDF Format

FORM NO. 3AE for Audit Report for Preliminary Expenses under section 35D (4)/35E (6) of the Income-tax Act 1961. FORM NO. 3AE audit report prepared by chartered accountant is to be obtained by a non-company assessee, other than a co-operative society, for claiming amortization of certain preliminary expenses or expenditure on prospecting, for certain minerals.

1. An assessee, being an Indian company or a person (other than a company) who is resident in India, incurs, any expenditure specified in sub-section (2),—

 (i)  before the commencement of his business, or

(ii)  after the commencement of his business, in connection with the extension of his undertaking or in connection with his setting up a new unit,

the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount equal to one-fifth of such expenditure for each of the five successive previous years beginning with the previous year in which the business commences or, as the case may be, the previous year in which the extension of the undertaking is completed or the new unit commences production or operation :

2. The expenditure referred to in the above para shall be the expenditure specified in any one or more of the following clauses, namely:—

(a)  expenditure in connection with—

 (i)  preparation of feasibility report;

(ii)  preparation of project report;

(iii)  conducting market survey or any other survey necessary for the business of the assessee;

(iv)  engineering services relating to the business of the assessee :

Provided that the work in connection with the preparation of the feasibility report or the project report or the conducting of market survey or of any other survey or the engineering services referred to in this clause is carried out by the assessee himself or by a concern which is for the time being approved11 in this behalf by the Board;

(b)  legal charges for drafting any agreement between the assessee and any other person for any purpose relating to the setting up or conduct of the business of the assessee;

(c)  where the assessee is a company, also expenditure—

 (i)  by way of legal charges for drafting the Memorandum and Articles of Association of the company;

(ii)  on printing of the Memorandum and Articles of Association;

(iii)  by way of fees for registering the company under the provisions of the Companies Act, 1956 (1 of 1956);

(iv)  in connection with the issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus;

(d)  such other items of expenditure (not being expenditure eligible for any allowance or deduction under any other provision of this Act) as may be prescribed.

3. Where the aggregate amount of the expenditure referred to in sub-section (2) exceeds an amount calculated at five per cent—

(a)  of the cost of the project, or

(b)  where the assessee is an Indian company, at the option of the company, of the capital employed in the business of the company,

the excess shall be ignored for the purpose of computing the deduction allowable:

(a)  “cost of the project” means—

 (i)  in a case referred to in clause (i) of sub-section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are shown in the books of the assessee as on the last day of the previous year in which the business of the assessee commences;

(ii)  in a case referred to in clause (ii) of sub-section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are shown in the books of the assessee as on the last day of the previous year in which the extension of the undertaking is completed or, as the case may be, the new unit commences production or operation, in so far as such fixed assets have been acquired or developed in connection with the extension of the undertaking or the setting up of the new unit of the assessee;

(b)  “capital employed in the business of the company” means—

 (i)  in a case referred to in clause (i) of sub-section (1), the aggregate of the issued share capital, debentures and long-term borrowings as on the last day of the previous year in which the business of the company commences;

(ii)  in a case referred to in clause (ii) of sub-section (1), the aggregate of the issued share capital, debentures and long-term borrowings as on the last day of the previous year in which the extension of the undertaking is completed or, as the case may be, the new unit commences production or operation, in so far as such capital, debentures and long-term borrowings have been issued or obtained in connection with the extension of the undertaking or the setting up of the new unit of the company;

(c)  “long-term borrowings” means—

 (i)  any moneys borrowed by the company from Government or the Industrial Finance Corporation of India or the Industrial Credit and Investment Corporation of India or any other financial institution which is eligible for deduction under clause (viii) of sub-section (1) of section 36 or any banking institution (not being a financial institution referred to above), or

(ii)  any moneys borrowed or debt incurred by it in a foreign country in respect of the purchase outside India of capital plant and machinery, where the terms under which such moneys are borrowed or the debt is incurred provide for the repayment thereof during a period of not less than seven years.

FORM NO. 3AE

[See rule 6AB]

Audit Report under section 35D (4)/35E (6) of the Income-tax Act, 1961

I/We have examined the Balance Sheet(s) of M/s___________as at ___________and the Profit and Loss Account(s) for the year(s) ended on that/those date(s) which are in agreement with the books of account maintained at the head office at__________and branches at


I/We have obtained all the information and explanations which to the best of my/our knowledge and belief were necessary for the purposes of the audit. In
my/our opinion, proper books of account have been kept by the head office and the branches of the abovenamed assessee visited by me/us so far as appears from
my/our examination of the books, and proper returns adequate for the purposes of audit have been received from branches not visited by me/us, subject to the comments given below :-

In
my/our opinion and to the best of my/our information and according to explanations given to
me/us, the said accounts give a true and fair view :-

(i) in the case of the Balance Sheet(s) of the state of the abovenamed assessee’s affairs as at_________and

(ii) in the case of the Profit and Loss Account(s), of the profit or loss of his accounting year(s) ending on

The statement of particulars required for the purposes of the deduction under section 35D/35E is annexed and in my/our opinion and to the best of my/our information and according to explanations given to me/us, these are true and correct.

Place:

Date:                                                     Signature

Chartered Accountant

ANNEXURE TO FORM NO. 3B

SECTION A

STATEMENT OF PARTICULARS REQUIRED FOR THE PURPOSES OF DEDUCTION UNDER SECTION 35D

1

Date of commencement of business

2

Where the deduction is claimed with reference to the expenditure incurred in connection with the extension of the industrial undertaking or the setting up of a new industrial unit, the date on which the extension was completed or new industrial unit commenced production or operation

3

Qualifying amount of expenditure

  1. Expenditure in connection with-

    (i) preparation of feasibility report

    (ii) preparation of project report

    (iii) conducting market survey or any other survey necessary for the business of the assessee

    (iv) engineering services relating to the business of the assessee

(b) Legal charges for drafting any agreement between the assessee and any other person for any purpose relating to the setting up or conduct of the business of the assessee

4

Cost of the project, i.e., actual cost of :

  1. land and buildings (including expenditure on development)

(ii) leaseholds

(iii) plant and machinery

(iv) furniture and fittings

(iv) furniture and fittings

((v) railway sidings

5

Deduction claimed under section 35D        

Place:

Date:                                                     Signature

Chartered Accountant

SECTION B


STATEMENT OF PARTICULARS REQUIRED FOR PURPOSES OF DEDUCTION UNDER SECTION 35E

1

Name(s) of mineral(s) or group(s) of associated minerals in respect of which operation relating to prospecting or development were undertaken

2

Year of commercial production

3

Qualifying amount of expenditure

Year in which expenditure was incurred

Amount of expenditure (Give details)

Rs.


Place:

Date:                                                     Signed

Chartered Accountant

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