Case-If a doctor earned Gross receipt from his profession Rs.10,50,000/- during the F.Y.2011-12 and he is also deal in F& O market, Total sale Rs.10 Lakhs & Total Purchase is Rs.12.50 Lakhs net loss is Rs.2.50 Lakhs . With the above facts please tell me what is the total receipt in the hand of doctor for the the purpose of tax audit.? It is necessary to tax audit for the F.Y.2011-12? Please suggest with reference to any case law/ decision /circular from competent authority/ Court.
14 July 2013
gross reciepts means earnigs earned without deducting any exp i.e. in ur case direct professional fees recieved from patients , consltuancy fees etc.
24 August 2013
As per section 44AB of the Income Tax Act, 1961 every business and profession has to undertake compulsory tax audit in case turnover from such business exceeds Rs 1 crs for business and in case of profession gross receipt exceeds Rs 25 lakhs from such profession. In case if turnover/receipt is less than given limit assessee can opt for deemed income provision and profit and gain from such business and profession has to be minimum of 8%
29 September 2013
THE TURNOVER OR GROSS RECEIPTS IN RESPECT OF TRANSACTION IN SHARES, SECURITIES AND DERIVATIVES MAY BE DETERMINED IN THE FOLLOWING MANNER.
(a) SPECULATIVE TRANSACTION: A speculative transaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scripts. Thus, in a speculative transaction, the contract for sale or purchase which is entered into is not completed by giving or receiving delivery so as to result in the sale as per value of contract note. The contract is settled otherwise and squared up by paying out the difference which may be positive or negative. As such, in such transaction the difference amount is 'turnover'. In the case of an assessee doing speculative transactions there can be both positive and negative difference arising by settlement of various such contracts during the year. Each transaction resulting into whether a positive or negative difference is an independent transaction. Further, amount paid on amount of negative difference paid is not related to the amount received on account of positive difference. In such transactions though the contract notes are issued for full value of the purchased or sold asset the entries in the books of account are made only for the differences. Accordingly, the aggregate of both positive and negative differences is to be considered as the turnover of such transaction for determining the liability to audit vide section 44 AB.
(b) Derivatives, futures and options: Such transactions are completed without the delivery of shares or securities. These are also squared up by payment of differences. The contract notes are issued for the full value of the asset purchased or sole but entries in the books of account are made only for the differences. The transactions may be squared up any time on or before the striking date. The buyer of the option pays the premia. The turnover in such types of transactions is to be determined as follows:
The total of favourable and unfavourable differences shall be taken as turnover.
Premium received on sale of options is also to be included in turnover.
In respect of any reverse trades entered, the difference thereon, should also from part of the turnover.
(c) Delivery based transactions: Where the transaction for the purchase or sale of any commodity including stocks and shares is delivery based whether intended or by default, the total value of the sale is to be considered as turnover.
Further, an issue may arise whether such transactions of purchase or sale of stocks and shares undertaken by the assessee are in the curse of business or as investment. The answer to this issue will depend on the facts and circumstances of each case taking into consideration the nature of the transaction, frequency and volume of transactions etc. For this attention is invited to the following judgments where this issue has been considered.
In case such transactions are for the purposes of investment and income / loss arising therefrom is to be computed under the head 'Capital Gains, then the value of such transaction is not be included in sales or turnover for deciding the applicability of audit under section 44 AB. However, in case such transactions are in the course of business, then the total of such sales are to be included in the sale, turnover or gross receipts as the case may be of the assessee for determining the applicability of audit under section 44 AB.
29 September 2013
@ CA Sunil Kumar pls comment on whether the querist needs to do tax audit or not as your final conclusion as the querist doesnt understand the anlysis but want final answer. so its a request after giving ur valuable opinion also do mention the final conclusion on the basis of your above analysis.
CAclubindia
