Accountancy Forum

There are many conflicts in companies and I. Tax ordinance regarding maintenance of accounts. Some of them are major while others are minor in nature.

The main issue is keeping the accounting record. According to sub section 6 of section 230 of companies Ordinance,1984

The books of account of every company relating to a period of not less than ten years immediately preceding the current year shall be preserved in good order

Provided that, in the case of a company incorporated less than ten years before the current year, the books of account for the entire period preceding the current year shall be so preserved.

According to sub Rule 4 of rule 29 of I.T Rules 2002
"The books of account, documents and records to be maintained under this chapter shall be maintained for five years after the end of the tax year to which they relate."

This is a big issue even for some small and medium organization because thousands of vouchers are prepared each year so it is very difficult for a company especially to keep record for ten year .Although the I. Tax Rules 2002.


Although according to rule 30 of I. Tax Rules 2002 the books and accounts, in case of company, whose income is chargeable to tax, shall maintain the books of accounts according to companies ordinance 1984.

Dear,

I agree that regulators should use sense to facilitate the regulated ones on the areas where it could be done without losing the purpose of any law.

However, any law is promulgated for unique and different purposes and there are some basis and backdrop to be understood where such differences are found. The purpose of CO84 and ITO 2001 is different, the areas to be regulated under these laws are different and the limitation periods etc may also be differently prescribed by these laws. It's not simply about maintenance of books of account when we talk in ITO 2001 perspective. I already explained it on some thread.

Under ITO the period during which an assessment may be re-opened is prescribed as 5 years. This is normally construed the major deriving factor for the time period described by ITO 2001.

However, there are so many proceedings under income tax law which keep on continuing even beyond that period. In such cases legislature cannot demand for books of accounts beyond that time limit. This in fact provides facility to assessees.

The purpose of companies law is entirely different and much more vast than IT 2001.


Regards,


KAMRAN.

Dear Kamran


Thanks a lot for your valuable comments.

Kamran, in my opinion the scope of I.T Ordinance 2001 is more vast than CO,1984. Because CO is only aplicable to companies while ITO is applicable to individuals, Sole Proprietors,AOP's, Foreign Missions, Foreigner and companies also.

Regards,

Awais Aftab

Awais,

The scopes cannot be compared since the very purpose of both laws is quite dissimilar.


Regards,


KAMRAN.