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44ab audit

Vinay Channabasappa (CA in Practice) (55 Points)

16 October 2015

Commission Income on which Tax has been deducted by Payer U/s 194 H exceed 40 Lakhs. So, is the assessee (payee) who has received this Commission Income liable to get the books of account audited u/s 44AB ?

Kindly advice.

Regards

CA Vinay

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12 Replies

DEVIL-Liv every moment of life (ca final) (1735 Points)
Replied 16 October 2015

NO these receipts are specifically excluded under section 44AB.

So. therfore not liable to audit.

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 16 October 2015

If it is a business then you are not liable as gross turnover is less than 1 crore. If it is a profession then you are laible to tax audit as limit exceeds rs 25 lac.

DEVIL-Liv every moment of life (ca final) (1735 Points)
Replied 16 October 2015

Originally posted by : Karthik.V.Kulkarni
	If it is a business then you are not liable as gross turnover is less than 1 crore. If it is a profession then you are laible to tax audit as limit exceeds rs 25 lac.

on commision income section 44AB is not applicable.

It is specifically excluded.

RAHULSMITTAL (Partner, V Mittal & Co) (252 Points)
Replied 16 October 2015

Commission paid is excluded from the income. If received, it must be counted while calculation 1 crore limit.

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 16 October 2015

@ devil: it is excluded from sec 44ad not 44ab. Correct me if i am wrong with relevant extract of sec 44ab

Miss Rinkal (Student) (1304 Points)
Replied 17 October 2015

@ Vinay:

No the payee is not subjected to 44AB audit as the income is business income and hence the turnover calculation will be wrt 1 cr and since the turnover disclosed here is below 1 cr, hence not subjected to tax audit

@ Devil:

I agree with karthik that commission income is excluded from 44AD and not 44AB.

@ Karthik:

However the said income will be considered as a business and not a profession. Since the said income has not been notified as professional income.

@ Rahul:

What do you mean by "Commission paid is excluded from the income." Please elaborate. However with rest part I agree with you.

RAHULSMITTAL (Partner, V Mittal & Co) (252 Points)
Replied 17 October 2015

If you read guidance note on tax audit, you will get to know there are some case where commission paid which are to be deducted from turnover and gross receipts. Not in every case.

CA-AK (CA) (600 Points)
Replied 17 October 2015

Section 44 AB tax audit, while 44AD is of presumptive income.Commision Income is not eligible for 44AD. However in this case income shall not be liable to tax Audit as Gross receipt is less than 1crore.

Miss Rinkal (Student) (1304 Points)
Replied 17 October 2015

@ RAHULSMITTAL

I got the point with what aspect that you meant the statement. Thanks. Actually I didn't get it at that point with what relation it was meant for, so I had asked. But anyways, thanks for sharing.