Profit u/s. 44AD in case of share trading activity

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Querist : Anonymous

Querist : Anonymous (Querist)

23 May 2011 My question is as under:
The new provision of section 44AD, how it will impact on share trading activity .

(F & O and Trading in Shares not speculative trading)

My client is engaged in Share Trading Activity,his turnover for F.Y. 2010-11 Rs. 42 Lacs,and has incurred a loss of Rs.1.50 lacs. (As u know share trading activity u can not predict the profit. He has a other income of Rs. 450000 i.e. interest and Rent income from HP.

My question is whether he is liable to get his books of account audit u/s. 44AB ?

As per the provision of section, both condition has to satisfy.

U S Sharma

U S Sharma (Expert)

24 May 2011 42+4.5=46.5 lacs

if his income is above 8% of gross turnover then 44AD will save the situation but in case of loss he is required to get audited u/s 44AB

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

24 May 2011 In case of F & O transactions, the absolute value of the profit or loss is the turnover and not the amount of transactions as noted in the contract note. In case of delivery based trading in shares ,the sale value is the turnover.

The decision in GROWMORE EXPORTS LTD. & ORS. vs. ACIT (2001) 78 ITD 95 (Mumbai)can be referred to.

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Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2011 Yes Sir

That's true.

Turnover in F & O considering the net of pur and sell is Rs. 350000/-
and incurred loss of Rs. 150000 and Interest income of Rs. 450000/-, still i have to get audit u/s 44AB.

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