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Computation of turnover w.r.t sec. 44ab

28 December 2014

Will the O/Put tax billed and recovered from customer will form part of turnover for calculation of 100 Lakhs w.r.t Sec. 44ab.

Let suppose in a case where basic sales amount to 90 Lakhs and it totals to 110Lakhs after adding VAT will the assessee be rquired to get audited u/s 44ab??

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12 Replies

Jaikishan (CA) (168 Points)
Replied 28 December 2014

Sales Tax, VAT or excise duties collected should not be taken into account for turnover if they are credited seperately to sales tax, VAT or excise duty account.

1 Like

CA Apoorva Gaurav (CA) (368 Points)
Replied 28 December 2014

But sir, as guidance note is not mandaory on the entity.

And, sec 145 evidently states that Purchase and sale of goods be valued inclusive of tax.

So, shouldn't there be a close refrence drawn from the act itself rather than guidance note.

Aamir (Article Assistant) (36 Points)
Replied 29 December 2014

Turnover Exclusive of tax to be considered as o'er Guidance Note and Section 44AB. Bciz wgen you fill ITR 4 P&L A/c Sakes Net if Taxes to be filled and considered for Turnover Kimit u/s 44AB.

CA Raj Doshi (Practising CA) (8944 Points)
Replied 29 December 2014

Nice logic aamir sir. So its exclusive of sakes tax, excise etc.

Chandan Kumar Gupta (STUDENT) (29 Points)
Replied 29 December 2014

Vat, Service tax, excise duty, custom duty etc. are to be form part of turnover. For example, if service tax is directly credited under current liabilities then you have to add it to your sales amount. If you have routed it through profit and loss account then it will already be included in sales.

MOHIT JASUJA (Student CA Final ) (21 Points)
Replied 29 December 2014

All indirect taxes will form part of sales and if including taxes sales will be above from rs 100 lakhs then it will be liable for tax audit u/s 44 ab

CA Apoorva Gaurav (CA) (368 Points)
Replied 29 December 2014

Originally posted by : Aamir
	Turnover Exclusive of tax to be considered as o'er Guidance Note and Section 44AB. Bciz wgen you fill ITR 4 P&L A/c Sakes Net if Taxes to be filled and considered for Turnover Kimit u/s 44AB.

Dear aamir though I second your views.

But, format of ITR can't be used for interpretation of law.

ITR forms are designed for administrative convenience and increased clearity secondly, If we go by your logic in that case why do we add Indirect taxes for sec. 44ad.

So in my opinion you might be correct but this can't be an explanation to it.

CA Apoorva Gaurav (CA) (368 Points)
Replied 29 December 2014

We are still getting varied responses couldn't form a conclusion.

CA Apoorva Gaurav (CA) (368 Points)
Replied 29 December 2014

Chandan & Mohit sir though I am getting this very answer from most of the CAs but none of them is substantiating this view with any legal base.

So, could you please tell me the legal basis for your opinions plz.

CA Raj Doshi (Practising CA) (8944 Points)
Replied 29 December 2014

Can someone go through Guidance Note on the same.

CA Apoorva Gaurav (CA) (368 Points)
Replied 29 December 2014

Originally posted by : Raj C Doshi
	Can someone go through Guidance Note on the same.

1st reply to the topic is the extract from guidance note only.

But, since guidance note is not mandatory on any entity neither IT deptt confers it and Sec 145 states something entirely different from what our guidance note says.

Thats why I m confused.