AUDIT U/S 44AB

 no

But Why, what is the meaning of Turnover?

Yes. as per guidline of ICAI turnover means purchase if it is more than sales.

tax audit will not be applicable.

44AB not attracted , the words which are used are sales , turnover , receipts .

If purchase above 40 lakhs was the intention of the legislature , the words " payment" also had to be added along with receipts.

krutesh , kindly provide me with the guidance note of the ICAI which states that .The term turnover is defined in guidance note as sales turnover . Pls dont mislead  , thanks

Thanks Uday Kiran

uday Kiran , Pls note that the case law provided by you is not in relation to normal purchase turnover . its in relation to turnover relating to trading of shares i think .

it should be noted by all that t/o in trading of shares is defined differently by guidance note itself .

In all businesses other than trading of shares , turnover wont mean purchase turnover .

Uday atleast read the case law before posting . 

Do not forget that your purchase will finally be reflected as a closing stock along with sales etc. I think you should audit. It is a receipt of materials after all. If you receive advance payment that is also counted.

NO sunil , i think your interpretation is wrong , Purchases above 40 Lakhs and  Advances above 40 lakhs dont attract 44AB .

Rajeev,

If Sales, Turnover  and  gross receipts of business exceeds 40 lakhs then there is audit. Advance money against future sale is a receipt and therefore counted for Section 44AB. If you treat the advance as a loan you will have to repay the loan by a/c payee's cheque or draft only. Section 269T does not allow you to repay a loan by invoicing. Read Section 269T carefully for other than companies. If you treat advance as a loan, no problem. If you treat it as an advance for future sales of materials that willbe adjusted by invoicing, it is your RECEIPT and included in the turnover.

If your purchase is 2 crores for capital account, I do not see a problem. However if it is for your stock in trade a purchase of 2 crore is a RECEIPT of something that is a revenue item. Therefore it is includible only if it is a closing stock item. If it is not a closing stock item and is sold, it cannot be counted twice as it is already in the sales turnover.

As the word receipt is not defined anywhere you will have to take the various dictionary meanings. Therefore please test meanings and definitions from everywhere and satisfy yourself that the purchases should not be falling under receipts. After all you are signing a delivery challan for receipt of something that is a revenue item and will be a part of your turnover in future.

 Dear hitesh,

as per income tax act 1961:

44AB. Every person,

The expression turnover in sec 44AB denotes purchases or sales. Therefore if his purchases exceed he is liable for 44AB audit

CIT v VIJAY MAHESHWARI (HUF) [1997] 228 ITR (st.) 157 (SC)

Thats it. Good job Uday. The only reason I elaborated is that whatever it is the transaction has to be counted only once. If purchase of Goods is 19 lakhs and Sold for Rs. 22 lakhs after value addition, the turnover or sales is only 22 lakhs and not 41 lakhs, because the purchase of goods cannot be counted twice (independtly as well  as a component of sales). Therefore the closing stock test is applicable. Say someone buys goods worth 2 crores and says that 1.8 crore is destroyed,still it will be under audit if he claims loss. It is under audit even if you receive from insurance company. therefore you must first test all facts and then decide if the limit of 40 lakhs is crossedor not before determining NOT TO DO THE AUDIT.

please give me the link of the above case law.