Tax Audit

Whether transactions in respect of forward sale purchase with a stock broker (called as vyaaj badla) where only difference amount is payable to the client is required to be considered for Tax Audit Purpose.

To clarify say forard purchase of Rs.20000100 is adjusted against a forward sale of Rs.20000110 hence oly Rs.10 is payable to the clint after deducting his brokerage. In this case whhether the client is required to get his acoounts audited u/s 44 A/B  Income Tax Act.

Please clarify with relevent case law/ circular etc. at the earliest.

Regards

Shankar Banerjee

Replies (1)

Dear shankar, in your case difference amount of Rs10/- will be treated as turnover whether it result in loss or gain. say for 100 transaction you incurr loss of Rs 5000/- in 80 transaction & Rs2000/-gain from remaining 20 transaction, then your total turnover for the purpose of tax audit will be  Rs 7000/-


And if your turnover crosses Rs 40lac for Assessment Year2010-11, then you are required to get your accounts audited.

I can't refer you any case law or circular in this regard.Just refer guidance note issued by ICAI in this matter
 but one thing to be note down here is that AS30,31,32 have been issued relating to Financial instrument-Recognition, presentation & disclosure & due to its issuance guidance note have been withdrawn. So, at this point of time i m not able to clarify your doubt completely

Hope it will help you a little bit.

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