Audit Query help...

IN CASE THE CS IS INVESTING IN SHARES AS INVESTMENT THEN CALCULATE CAPITAL GAINS AND THE PROFESSIONAL INCOME AS BUSINESS INCOME .IF IT IS SPECULATION SEC.44AB APPLIES IF THE NET PROFIT EXCEEDS 40 LAKHS.

For the professionals tax limit is Rs 10 lacs for the F Y 09-10 so no tax audit applicable for u r client & for the trading fo shares wich Excceds Rsd 40 lacs duing last year it is not an professional income

Dear Vikas

Kindly clearify whether your client is investing on behalf of other persons. If affirmative than the income will be Of PGBP otherwise...! it is Investment Income and will attratct CG only

Vikas, its very clear from your question that your client is a CS and his turnover is Rs. 9 lacs so, he is not liable for the tax Audit u/s 44AB as for the F.Y. 2009-10 as his income is below prescribed limit (i.e. Rs. 10 lacs).

The answer of second question is he has made investment in shares out of his savings so, income by selling the shares will only be calculated under Capital gains.

And finally if he has made investment out of his saving then the closing stock of the investments will be shown under the head INVESTMENT only.

The ceiling for professional is Rs 10 lakhs and the income earned from trading in shares is not a professional income hence tax audit will not be applicable however  capital gains will be attracted

Originally posted by : Vikas
	One of our client is  CS having own profession.... He is also investing his savings in share market.. In previous year 2009-10, his turnover of shares dealing exceeding 40 lakhs.. & from profession, turnover say Rs. 9 Lakhs.. now, is he liable for tax audit u/s 44AB???????? & closing stock of such shares wii be shown under the head "stock" or under the head "Investment" ????

 It is not necessary that every kind of investment is considered under capital gain. If there is a demat account and assessee is investing amount using demat account then it is called non delivery based trading and this is considered under Speculation business [Section 43(5)]. However, if he is purchasing shares then it shall be considered under Capital Gain. According to me it looks like that he is trading in shares which will make it speculation business and shares left at the year end will be stock and not investment.

For Audit u/s 44AB both the profession and the business shall be considered seprately and hence limit shall also be considered seprately