Applicability of Tax Audit
This query is : Resolved
21 September 2009
Hi. I wanted to know the applicability of Tax Audit for an client who has received advance amounting Rs 1 Cr, but having his gross turnover less than 40 lakh. The client is engaged in the project activity.
21 September 2009
gross revenue receipts if at 1 crore , 44Ab attracted , audit applicable.
Capital receipts if at 1 crore , audit not applicable,
Although the guidance note on tax audit clearly states that advance received is liability until services are rendered , hence they dont form a part of gross receipts , but still there are issues left .
It has been held in some cases , that advances include an element of profit , hence it's covered in gross receipts
Guidance note of the ICAI for turnover of contractors replacing ASI 29 is a big help.
Although i believe the provisions are still open to intepretation , even after 25 years.
Capital receipts if at 1 crore , audit not applicable,
Although the guidance note on tax audit clearly states that advance received is liability until services are rendered , hence they dont form a part of gross receipts , but still there are issues left .
It has been held in some cases , that advances include an element of profit , hence it's covered in gross receipts
Guidance note of the ICAI for turnover of contractors replacing ASI 29 is a big help.
Although i believe the provisions are still open to intepretation , even after 25 years.
21 September 2009
no tax audit is not applicable
21 September 2009
Advance can be refunded if you do not carry on the project or disassociate yourself from the project. Advance is not considered for Section 44AB. I agree with expert Jitendra in the present context.
21 September 2009
Tax audit is not applicable
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