tax audit
This query is : Resolved
07 September 2010
Sir,
While carrying out tax audit for the AY 2010-11, i came up with the following two issues..
1) the assessee is a used car dealer who only deals in very old cars( for eg: 70-80 model maruti cars):: he purchased an old car for an amount exceeding 20,000/- in cash, now on being asked he said that it is common in his trade to purchase an old car for cash.. Will this contention of assessee be valid for sec 40A(3)?
2) another assessee(some other business) sold an asset, the payment for which will be received after 3 years.. how should we treat this in balance sheet as well as for audit purpose?
pls advice
Thanking you
Regards
Rohit Sharma
While carrying out tax audit for the AY 2010-11, i came up with the following two issues..
1) the assessee is a used car dealer who only deals in very old cars( for eg: 70-80 model maruti cars):: he purchased an old car for an amount exceeding 20,000/- in cash, now on being asked he said that it is common in his trade to purchase an old car for cash.. Will this contention of assessee be valid for sec 40A(3)?
2) another assessee(some other business) sold an asset, the payment for which will be received after 3 years.. how should we treat this in balance sheet as well as for audit purpose?
pls advice
Thanking you
Regards
Rohit Sharma
07 September 2010
1) The plea of the assessee is weak under section 40A(3).
2) If possession is handed over, sales can be booked. If the asset sold out was in good working condition, 3 years deferment is doubtful for which a specific note may be included in the "notes on Accounts" after obtaining an explanation from the management.
2) If possession is handed over, sales can be booked. If the asset sold out was in good working condition, 3 years deferment is doubtful for which a specific note may be included in the "notes on Accounts" after obtaining an explanation from the management.
08 September 2010
Then how the matter (1) should be dealt in tax audit. plz advice
09 September 2010
Matter 1 under given circumstances may not be justified under sec.40A(3)
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