Derviaties transaction

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CA.S.KARTHIKEYAN

CA.S.KARTHIKEYAN (Querist)
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23 June 2012 Mr X is Doing daily trading in shares & commodities by sub broker through recognized stock exchange he earned net loss of Rs.20100/-as per sec 43(5) any transaction through recognized Stock exchange is Not a Speculative business , Then it is normal business .if it is normal business whether we we want to declared u/sec 44 AD or not If Sec 44 AD means what is turnover to be taken or want to declare income under any other manner.if less than 8% means 44 AB applicable ?( Note : he has not purchased with intention as investment )

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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23 June 2012 1. Yes it is a normal business.
2. Do not opt for Section 44AD. Show loss.
3. As per sub-section 5 of Section 44AD, audit is required if the assessee shows income less than 8% AND his income exceeds the exemption limit.
4. If the total income does not exceed the exemption limit, then audit is not required.

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CA.S.KARTHIKEYAN

CA.S.KARTHIKEYAN (Querist)
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25 June 2012 BUT suppose the Loss is Rs.200100/- means what to .. how to deal it since as per sec 44AD we should show compulsory 8 % or more income in case loss means we need 44 AB to do it .. what is the gross turnover of Business .. please reply it

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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26 June 2012 As I said audit is compulsory if the assessee shows income less than 8% AND the income of the assessee EXCEEDS the exemption limit.

Since there is a loss, the income does not exceed the exemption limit and audit is not required (PROVIDED THE ASSESSEE DOES NOT HAVE ANY OTHER INCOME OR THE OTHER INCOME AFTER SETTING OFF LOSS DOES NOT EXCEED THE EXEMPTION LIMIT).

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