Definition of "Turnover" for the purposes of Sec 44AB

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Sandeep Keswani (Querist)
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06 January 2010 If the total purchase during a F.Y. exceeds Rs. 40 lacs but total sales is below Rs. 40 lacs, then will it be mandatory to get the accounts audited u/s. 44AB ??

Pls clarify the definition of "Turnover" for the purposes of Sec 44AB. Also provide reference of any circulars or judgements. THANX.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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06 January 2010 Whether for purpose of attracting section 44AB, receipts of an Assessee by way of sale or trading business and receipts for doing job work can be clubbed for purpose of finding out whether limit of Rs. 40 lakhs prescribed for attracting provisions of section 44AB.

Purchase not attract section 44AB.

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)
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06 January 2010 Rs. 40 lakh limit is applicable for Sections 44AD & 44 AF.

According to 44AB, If any business not under cover of Section 44AD & 44AF then that business has to maintain Books of Accounts according to Sec 44AB.

44AB says that:
1) If there is exceeded Profit of Rs. 1,20,000 in Previous 3 year immediately preceeding of Relevent Previous Year, or
3) Total turnover exceeded of Rs. 10,00,000 in previous 3 years immediately preceeding the relevent previous year.

Then Company need to maintain Books of Accounts.

TURNOVER means total sales from that business.

Regards!!!
Dinesh S. Adhikari

Bimal Thacker

Bimal Thacker (Expert)
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06 January 2010 I am of the different view then as express by above expert.
if total purchase during a F.Y. exceeds Rs. 40 lacs but total sales is below Rs. 40 lacs, then also section 44AB is applicable and books are required to be audited.

Ratan Sharma

Ratan Sharma (Expert)
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06 January 2010 44AB not applicable

Sandeep Keswani

Sandeep Keswani (Querist)
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06 January 2010 Dear Mr. Bimal Thacker, please explain with reasons supporting your views. Thank you.

Bimal Thacker

Bimal Thacker (Expert)
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06 January 2010 Dear Sandeep and all
Please go through The Bombay Bench of ITAT in case of Vijay N. Maheswari HUF, Bombay v ACIT (ITA No. 515/Bom/91 and 1725/BOM/91 dt. 29.9.1994) in which it has held that if purchase exceeds Rs. 40 lakhs, the same would constitute turnover and tax ausit would be applicable.

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