Tax Audit

Dear Santosh,

Your question is bit weired.

One cannot earn income/book income/recognise revenue by selling the goods/produc/services to ownself.

I doubt accounting treatment of above transactions and so the tax Audit part.

Do let me know if you find any thing different from above.

thanks

Please rephrase your question. Proprietorship firm? Individual partner?

Please give clarity and details.

Sale to proprietorship by proprietorship firm is a drawing (transfer from proprietorship to proprietor). As far as equity shares are concerned, if an individual converts his shares from business asset to personal asset, Capital Gain is Leviable and also vice versa. Regd. goods, you will have to read the provcisions as they come under transfer of goods act.

If you transfer your own goods to yourself, you will have to check if VAT is leviable and the value you have to use for the transfer. Sales Tax used to hammer individuals who used to buy on C Form and then use the goods for personal use.

What is the compulsion for you to do the sale this way to yourself. You will complicate your case much more. It depends on whether you are using the goods for personal use or just making book adjustment. Just leave it alone in the proprietorship if you are not using it.

Have to agree with much of what sunil said. 

If there is no consideration received, then drawings are the substance of the transaction u dub as sale... but there is an aspect, that you must be making the sale at a marked up rate. This profit cannot be your income by being part of sales.. u cannot give income to yourself like Juzer pointed out.

You may have adverse reverse tax implications in VAT. Since u have worked out somehow that gross receipts are 48L, u will have to take the tax audit anyway.

anybody tele me Sale to proprietorship by proprietorship firm(transfer from proprietorship to proprietor).?
 

It will be shown as withdrawal in the Credit side of the Trading Account & generally shown at cost. i do not understand the need for doing so(i.e. accounting at cost plus profit)

Sunil

i dont know what does it mean when u say , sale by your own proprietory concern to your own self .

If there is some transfer of goods , i guess it will be at cost and reduced from purchases , debited to drawings .

Drawings Dr , To purchases ( the question of crediting sale doesnt arise )

I understand the following

1.doctor by profession

2.manufacture of medicines

medicines-direct sale Rs 20 L(62-42) is less than Tax audit limit

Profession income-Rs 48L is more than tax audit limit.

tax audit is must as both come under one PAN

Two allied laws come (be cautious)

1.Not to cross Rs 1.50 crores in Manufacture of medicines (excise is payable on clearance whether for sales or use for profession

2.Vat-One must expunge input credit for medicines used for Profession.