Applicability of Tax Audit on Software Consultancy

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A. Gupta (Querist)
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28 August 2007 A Pvt. Ltd. Company is providing software development consultancy services. During the financial year 06-07, the gross business receipts were around Rs. 24 lacs. Whether company is liable to tax audit u/s. 44AB of the Income Tax Act, 1961? Which limit would be applicable to it for tax audit - Rs. 40.00 lacs or Rs. 10.00 lacs?
Please give urgent reply.

A. Gupta

A. Gupta (Querist)
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Kaustuv

Kaustuv (Expert)
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28 August 2007 the company in this case is NOT liable to tax audit u/s 44AB as the threshold limit is Rs. 40 lakhs. The comapny is not carrying any profession, so Rs. 10 lakhs limit does not apply to it.

SRINATHA

SRINATHA (Expert)
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28 August 2007 Obviously, 40 Lacs.

A. Gupta

A. Gupta (Querist)
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31 August 2007 I mentioned that company is rendering consultancy services in development of software and does not involve in any selling activity.

Profession includes Information technology and technical consltancy as defined in I.Tax Act, 1961.

Then why limit of Rs. 10.00 lacs does not become applicable?

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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02 September 2007 Profession involves occupation requiring purely intellectual or manual skill - CIT v. Manmohan Das [1966] 59 ITR 699 (SC).

Software consultancy(& not sale of software) requires pure intectual skills.Therefore is a profession.

Therefore, lilmit of tax audit will be as applicable to professionals

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