Tax Audit

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Surendra Singh Chouhan (Querist)
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18 July 2011 Hello everyone...
I have a query that whether tax audit should be implemented or not?

There is a proprietor concern doing its ativities in the placement consultancy area.
This concern also provides man power and gets the salary from the recruiter on behalf of the deployed employees and than paid the salary to respective employee. for this activity, this concern gets only 5% margin on invoice value. Total invoice amount for the year is Rs. 31 lacs.

So, my question is that :-
1. whether supply of man power is profession u/s 44AA & 44Ab If recruiter deductes TDS u/s 194C?

2. Acting as a intermediator will fall under the category of profession?

CA KRISHNA KUMAR DARUKA

CA KRISHNA KUMAR DARUKA (Expert)
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18 July 2011 In my opinion supply of manpower is not a profession but a business. But since the net profit will be less than the minimum amount taxable in case of an individual, tax audit will not be applicable.

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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18 July 2011 Under section 44AA the meaning of professional is, "Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette." Further under section 194J, the term professional is under, "(a) "professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;"

So manpower supply is not covered under these sections.

So it is a business on which 44AD is applicable. But if TOTAL INCOME, i.e. income after adding income from all other sources and deducting all eligible deductions is below 1,60,000 then no need to get your accounts audited.

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