Meaining of Turnover/gross receipts u/s 44 AB

This query is : Resolved

CA Sanjay Baheti (Querist)
Follow

06 October 2010 One of our client being a company is in development stage. It has not started commerical operation till 31st Mar,10. During the year 2009-10 company has done one trial run sale more than Rs. 40 L.

They are capitalising all the expenses under the head " Expenditure during development phase". the above trial run sale will be deducted from the exp. during development phase, because it not a commerical sale. Hence it will be not shown in profit & loss account.

My querry is whether this sale will be considered as Sale.Turnover or Gross receipt as per section 44 AB of income tax act for tax audit purpose.

In other words will tax audit be applicable to our client.

CA Amit Joshi

CA Amit Joshi (Expert)
Follow

07 October 2010 As per my opinion your client is liable for Tax Audit because as per Sec.44AB whether there is trial run sales or commercial sales it doesn't matters. If there is Sales more than 40Lks you are liable for Tax audit.

Kishanlal Paliwal

Kishanlal Paliwal (Expert)
Follow

07 October 2010 Whether the goods is sold out of goods produced during normal or trial operation doesn't make any difference for the purpose of calculation of Turnover.

Regards
K.L.Paliwal

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok