Business income

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Manju navandhar (Querist)
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31 March 2012 An assesssee offers income under the head "profits and gains from business or profession".

He wants to sell his stock at a price less than the market value. Can he do this?
In other words, is he obliged to offer the sale of stock at market value. Can the assessing officer question the transaction and enhance the income?

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Manju Navandhar

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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31 March 2012 A LOT DEPENDS UPON TO WHOM U SELL IF U SELL TO A RELATED PARTY THEN THERE MAY BE PROBLEM
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Manju navandhar

Manju navandhar (Querist)
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02 April 2012 Even if the sale is to a related party, under which section can the assessing officer enchance the sale value of the transaction?

CA Kishore Tallam

CA Kishore Tallam (Expert)
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03 April 2012 Assessing officer doesnot have a right question the decision of the assessee.
In this case, the sale consideration is less than market value, there is no problem to both purchaser and payer.
However, if the sale consideration is more than market value and the buyer is a related party u/s 40A(2), then that excess payment will be disallowed.

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CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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04 April 2012 No eefect of section 40A(2) on sale consideration. Section is applicable only if u make a claim for any expenditure. Section 40A(2) can be appluied only if any expenditure is claimes and that too the exp so claimed is more than its fair market value than only the disallowance will trigger. No problem in making less profits by selling goods at below market value provided u can prove such sale. Because they may allege that u have sold at market value and recorded sale at below market value so as to reduce profits.

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