Tax audit
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 April 2012
While conducting audit of this year we have found that during Year 2010-11, company has earned total receipts of Rs. 63 Lacs (commission Rs. 58 Lacs and interest on deposits with steel authority of india Rs 5 Lacs). and also that the company has obtained form 3CA & 3CD from CA.
We have to confirm whether the company was required for tax audit since its receipts was less than Rs. 60 lacs or Auditors has considered interest amount while calculating the limit of Rs. 60 Lacs.
If Auditor considered the interest income, whether he is correct to consider it or not.
If Tax Audit was not required, what are the consequences.
Plz reply
P.S : Company is a commission agent for leading steel companies.
We have to confirm whether the company was required for tax audit since its receipts was less than Rs. 60 lacs or Auditors has considered interest amount while calculating the limit of Rs. 60 Lacs.
If Auditor considered the interest income, whether he is correct to consider it or not.
If Tax Audit was not required, what are the consequences.
Plz reply
P.S : Company is a commission agent for leading steel companies.
18 April 2012
Interest income has nexus with the commission income / business. So the stand taken by the CA is correct in considering the interest income while calculating turnover.
Message likes :
1 times
18 April 2012
The interest received on deposit from SAIL is
incidental to the Commission Business.
In absence of the deposit, Agency was not possible. The stand taken by the auditors are
very much correct looking to the magnitude and size of the business.
.
In case tax audit was not required but assessee files Tax Audit Report, there is no problem from department's side.
.
In case where audit was required but assessee fails to get his account audited penalty U/s 271B is leviable, which is 0.5% of turnover or 150000/- whichever is less.
.
incidental to the Commission Business.
In absence of the deposit, Agency was not possible. The stand taken by the auditors are
very much correct looking to the magnitude and size of the business.
.
In case tax audit was not required but assessee files Tax Audit Report, there is no problem from department's side.
.
In case where audit was required but assessee fails to get his account audited penalty U/s 271B is leviable, which is 0.5% of turnover or 150000/- whichever is less.
.
Message likes :
1 times
18 April 2012
Disagree with experts.
Interest income will not be included in gross receipts for consiering limit for tax audit.
Please refer guidance note on tax audit which says that interest income unless assessed as Business income (i.e. for finance companies), it shall not form part of gross receipts.
Hence, the stand of the auditor is not correct.
You are not required to undertake any tax audit for this year.
Interest income will not be included in gross receipts for consiering limit for tax audit.
Please refer guidance note on tax audit which says that interest income unless assessed as Business income (i.e. for finance companies), it shall not form part of gross receipts.
Hence, the stand of the auditor is not correct.
You are not required to undertake any tax audit for this year.
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