06 August 2011
DEAR SIR ONE OF MY CLIENT HAS 8 HEAVY TRUCK AND HE IS ALSO EARING FROM COMMISSION INCOME FROM OTHERS TRUCK. BUT ON THE PROCESS OF EARNING OF COMMISSION HE IS RECEIVED FULL VALUE OF FREIGHT AND AFTER DEDUCTING OWN COMMISSION BALANCE TRANSFER TO THIRD PARTY. AND FULL FREIGHT VALUE HAS CROSSED Rs. 60 LAKHS. THEN HE IS ELIGIBLE FOR U/S 44 AE. AND HE IS NOT LIABLE FOR TAX AUDIT. PLEASE ANSWER MY QUESTION ? THANKS IN ADVANCE
07 August 2011
et commission has to be taken as turnover only in case of commission agent! as ur client have both business my advice is net commission and transport receipts are to be taken for consideration of tax audit limit! accounting also to be made as only net commission should be form part of turnover with transport receipts
Concept of turnover and gross receipts are diffrent in case of commission receipts as per sec 44 ab only net commission has to be taken as turnover only in case of commission agent! as ur client have both business my advice is net commission and transport receipts are to be taken for consideration of tax audit limit! accounting also to be made as only net commission should be form part of turnover with transport receipts
07 August 2011
In the First case of owning and running the trucks on hire- 44AE can be opted. The Income or turnover of Section 44AE is not considered further from this end for the purpose of turnover. Section 44AB excludes this completely . Now we come to his commission business- . It is material here to consider whether he receives payment in his own name or in the name of the truck owner? . If he raises a bill on the customers or/and customer credits all the Freight Charges Payable to his account in respect of trucks of other owners, then whatever he will receive on behalf of others, the same will be treated as his own gross receipts. .
The unpaid Freight Charges by the parties are shown as his credit balance and not of all other truck-owners. . In this case, his situation is like a "trader". He may have income from freight margins also except commission merely. .
In such a case he should get his accounts audited when GR exceeds 60.00lacs. . He may opt for Section 44AD also in a case where he has GR not exceeding Rs. 60laccs. . It should not be confused here with the application of Section 44AE. As, in such a case where trucks are not owned, 44AE is not applicable. 44AD can be applied.
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If he receives pure commission income, and the freight charges are not routing through him, he is not touching the freight charges cheques or cash, then commission will be his gross receipts. .
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