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TAX AUDIT FOR MULTIPLE BUSINESSES

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CA Uday Kiran

Chartered Accountant

653 Points Posted on 11 September 2020

I have an assessee who is carrying on 2 businesses

1. Photo Development Service - T.O (12 lakhs)

2. Commodity Trading (Futures Intraday, delivery is not there, squared off daily) - T.O (56 Crores)

For 2nd business, he incurred 3 lakhs loss and intend to carry forward this speculative loss, hence tax audit is applicable here - Even sum of absolute figures (Profit/loss) per transaction also more than 1 crore, tax audit is inevitable

In this case, how to proceed for tax audit. Is it possible to disclose speculative loss and avail presumptive taxation scheme for 1st business or both turnovers needs to be aggregated?

For 2nd business what is the Turnover to be disclosed in ITR - Full sale - 56 crore, sum of absolute figures - 2 Crore?

Plesae guide me in both tax audit and filling of information in ITR perspective also.

Need experts help in proceeding further. Thanks in advance.

Replies (2)

Quick Summary

This discussion addresses the complexities of conducting a tax audit when an individual operates two distinct businesses: a photo development service and commodity trading. The core issue revolves around determining the correct turnover for tax audit purposes, especially concerning speculative losses in commodity futures. Expert advice suggests aggregating both businesses for presumptive taxation, provided the combined turnover doesn't exceed the threshold, and clarifies that commodity transactions on recognised exchanges may not be treated as speculative. The recommendation is to present a consolidated profit and loss account for a joint audit.

Gagan Deep Singh

CHARTERED ACCOUNTANT

1190 Points Posted on 12 September 2020

Turnover for 2nd business will be absolute figures (Profit/loss)- 2 crore. Please see institute guidance note on tax audit.

You can add both the business for presumptive taxation purposes but it will cross 2 crores which is threshold limit.

Commodity trading on which commodity transaction tax is paid is not considered as speculative business if it carried on recognized stock exchange. Please see clause (e) of first proviso to section 43(5).