Tax audit applicability

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pranjal (Querist)

07 August 2013 Sir,
I would like to know whether tax audit u/s 44AB is applicable under following situation:

Sales 8Lakhs
Other Income 3 Crore (Divident,Interest etc)
Net Profit 2 Crore.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

07 August 2013 44AB is not applicable if we consider only turnover as the criteria. But there is one more word i.e. "Gross Receipts" in the business.
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As Interest Income and dividend income is main source of income, these may be covered under "Gross Receipts" in the business looking to the fact that certain deductions
have been claim in arriving the Net Profit.
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To avoid any ambiguity, it is best idea and cheapest bargain to get the accounts audited.
.

pranjal

pranjal (Querist)

07 August 2013 Dear Paras Sir,
Thanks for your valuable feedback. Its true that the Gross Receipts are not defined in the Act but there is a Guidance Note .

Please have a look at the link mentioned below and kindly let me know your views:

https://www.simpletaxindia.net/2012/02/audit-44ab-turnover-sales-gross-receipt.html

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

07 August 2013 Thanks for the link given by you, however, I have read it earlier also from Guidance Note on Tax Audit issued by ICAI.
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Expenses claimed may have an impact on forming a view.
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Suppose Interest has been paid for the amount borrowed and in turn the said amount may be invested to earn interest thereon, in such a situation the activity becomes at par with business transaction and looking to the quantum of net interest income, the same may be treated as gross receipt.
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If, accounts are audited no body will ask that - why the audit has been carried out ?
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Compare the costs and benefits and decide.
.

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