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Tax audit applicability

SVSHAH (CA Final) (122 Points)

17 September 2011

One of the client is engaged in business of Textile garments Reail trading where turnover is 35 lacs but he is also engaged in trading of equity shares as side business where turnover exceeds 60lacs.

Query is whether Tax Audit is applicable in this scenario where Trading in equity share is side business.

Some consultants are saying YES, its applicable where some are saying NO because its not the main business.

Pls. advise

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21 Replies

Mohammad Afroz Ahmed (Article student) (51 Points)
Replied 17 September 2011

Hey,

I Think if both turnovers are shown under the same organisation, Tax audit is applicable. If turnover from Trade of textile garments is shown in a different business name, tax audit u/s 44 is not applicable.

Thanks
.

ashish gupta ( student) (1922 Points)
Replied 17 September 2011

Tax Audit will be applicable.

Income from all source of trading activites will be added to check the limit of 60 lakhs.

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 17 September 2011

tax audit will be applicable for both

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 17 September 2011

You carry out trading m your terminal or through a stock broker???????

Coz, if you r showin d share trading income in capital gains, den tax audit is nt applicable, otherwise yes

MANOJKUMAR G JAIN (PARTNER) (32 Points)
Replied 17 September 2011

Tax Audit Applicable if he do shares trading as business.

(Guest)

I do not understand the concept of main business. Business is business. If a transaction comes u/s 2(13) the income is charged under the head business.

Trading in equity shares + trading in textile, if combined turnover exceeds 60 L audit is compulsory.

https://taxbykk.blogspot.com/

Nitin Grover (CS) (1228 Points)
Replied 17 September 2011

Dear Friend

Tax Audit is not compulsory. Share Trading is part of capital gain.

if some one says Tax Audit is compulsry i will suggest that tell them also to take TIN (VAT Registration Number also) because there is applicablity of Rs. 10 lakhs transaction.

So as per my views only conclude Textile business.

Regards

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 17 September 2011

Originally posted by : kaushal (taxbykk)
	I do not understand the concept of main business. Business is business. If a transaction comes u/s 2(13) the income is charged under the head business. Trading in equity shares + trading in textile, if combined turnover exceeds 60 L audit is compulsory. https://taxbykk.blogspot.com/

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 18 September 2011

Dear Friend,

Lawfully it is Applicable.

But I Suggest You to Show Trading in Equity Share as Investment Activity as Capital Income.

so You Can Escape From Tax audit.

syam kumar (md) (58 Points)
Replied 18 September 2011

I am a salaried employee and the tax is deducted at source. My income for this year may exceed 1 Cr due to execise of ESOP. Am I liable of compulsary tax audit?

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 18 September 2011

its nt applicable, since d income is nt taxable u/h PGBP

1 Like

CA Devender Chauhan (Group Financial Accountant) (1526 Points)
Replied 19 September 2011

If the turnover from indivudual business doen't exceed Rs. 60 Lakhs then tax audit will not be applicable.

It is nowhere written in section 44 that tax audit will be done assesse-wise. It is business-wise. S

So in your case it will not be applicable.

CS Bijoy (Expert) (6394 Points)
Replied 19 September 2011

As per section 44AB the agreegate income from all source is taken for limit of 60 lakh...

So Applicable.

CA Devender Chauhan (Group Financial Accountant) (1526 Points)
Replied 19 September 2011

⁴ 44AB. ⁵ Every person,—

(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds ⁶ [sixty lakh rupees] in any previous year ⁷ [***]; or

It is clearly mentioned in Section 44AB that turover of Business exceeds Rs. 60 Lakhs. It is nowhere written that income of assessee or businessess will be taken into consideration while determining the applicability of this section.