44AB Vs AS-9

Hello friends, 

Pls give ur opinion on the situation...

 

A Ltd has made sales of Rs 36.5 lakhs as on february 2009.

In March, the company has made sales of Rs. 4 lakhs to its customers....

On the basis of previous experience, expecting a 25% return of sales booked, the company did not recognise Rs1 lakh as its turnover/sales...

 

Is the company liable for tax audit u/s 44AB?

Assume gross receipts are only Rs.35 lakhs...

Replies (7)

As per my opinion the company liable to tax audit u/s44AB. I could not under stand Gross receipts meas
 

I meant cash received only 35 lakhs,

so we can ignore the gross receipts aspect... i.e.,

just on the basis of turnover, whether tax audit necessary?

Good Morning Bhai......!

I must tell u nw I have one more reason to log on to this site cos I find ur changing names n pics quite interesting n funny attimes....:) (In a good sense obviously)

Coming to Ur question - Bhai I think -

AS-9 requies "Provision to be made based on past experience of sales return/warranties"  I mean in ur example A Ltd. has to recognize its Turnover @ 40.50 Lacs, only thing is Altd. will also make a provision of Rs. 1 Lac asainst expected return.

Now Tax Audit will be required since Rs. 1 LACS IS NOT THE ACTUAL RETURN WHICH CAN BE REDUCED FROM THE TURNOVER IT'S JUST AN EXPECTATION/PROVISION.

Needless to say Rs. 1 Lac will not be allowed as deduction....

Good Afternoon

sir there is not applicattion of AS in income tax act,

Hi friends,

Thanks for replying.... solved...

 

Gaurav bhai, section 145 does not say that AS is irrelevant.....

But

I-know-nothing

nice explanation Mr Amir

In my opinion the company should recognised the revenue of Rs. 4 lacs for march beacuase when the property in the goods alongwith risk & rewards has been transferred and there is reasonable certainty regarding the collectibilty at the time of sale. and if there is any uncertainty regarding the collectibily subsewuent to the sale the provision should be made for the same i.e. Rs. 1 lacs. And as per 44AB Gross Turnover would be Rs. 40.50 lacs(36.5+4) and no provision would be allowed for sales return.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 01 September 2026
Article Assistant

SGNG & Associates

New Delhi

CA Inter

View Details
Company
25 August 2026
Senior Accountant

MG Associates

New Delhi

CA Inter

View Details
Company
24 August 2026
Semi-Qualified CA/CA Finalist - Tax, GST, Audit & Accounts

Bharat Shah & Associates

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 16 September 2026
CA Article Trainee

SR BAGAI & Co.

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 15 September 2026
Freelance Taxation Content Writer Intern

Interactive Media Pvt Ltd.

New Delhi

CA Inter

View Details
Company
28 August 2026
Audit Manager

K A R M & CO

Mumbai

CMA

View Details
Company
ARTICLESHIP 16 September 2026
Article Assistant

MANUJ SHARMA AND COMPANY

Noida

CA Inter

View Details
Company
09 September 2026
Chartered Accountant

Aviv Global Private Limited

Ahmedabad

CA

View Details