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Tax audit limit for a company running nursing home.

NAMAN BANSAL (NONE) (26 Points)

01 October 2014

As we know that tax audit of doctors is done when gross receipts are more than ₹ 25 lakhs, but this limit is in case profession is carried on as individual. What would be the limit if profession is carried in the form of company ( nursing home in the form of company), whether tax audit limit will be ₹25 lakhs or ₹ 1 crore..??

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4 Replies

Ravi Kumar Prajapati (CA FINAL) (766 Points)
Replied 01 October 2014

Audit of Company is Compulsory irrespective of its Turnover...so in your case also audit of company is compulsory...irrespective of company's turnover...

NAMAN BANSAL (NONE) (26 Points)
Replied 02 October 2014

Dear friend, Please refer to my question above, i am talking about Tax audit under the Income Tax Act, 1961. But, u replied about the Statutory audit of a company under Companies Act, 1956.

Thanks for your reply.. I APPRECIATE IT

Ravi Kumar Prajapati (CA FINAL) (766 Points)
Replied 03 October 2014

1 crore...

Ajay (CA Job) (512 Points)
Replied 03 October 2014

Dear Naman

1.In your case, basically the question is whether the activity of running a nursing home by an incorporated company is a business or practice of profession.

2. Guidance note issued for tax audit under Section 44AB of the Act by the Institute of Chartered Accountants of India have classified nursing home as a business activity and not as a professional activity.

3. Further, the question as to whether a nursing home run in the form of a company can be said to be profession was examined in the case Income Tax Officer vs Ashalok Nursing Home (P) Ltd. though on a slightly different facts. Therein the question was whether the "Daily Case Register" in Form 3C to be maintained by the "professionals" as a requirement under Section 44AA of the Act, r/w Rule 6F(3) of the IT Rules was applicable in case of a Nursing Home incoporated as a Private Ltd. company. The Tribunal observed that since the practice of a profession requires personal skill and an artificial person like a compnay cannot be said to possess any personal skill required to practice a profession and was thus, held not to be carrying on a profession as referred to in Sec.44AA.

4. Based on the above points and facts of your case, I feel a Nursing Home (a Company) will be a business and will need audit only if the gross receipts exceed Rs.1 Crore.

If anybody knows about any further development or contradictory judgements, please contribute.

Regards

Ajay