Tax Audit of Commission Agent

Others 2352 views 2 replies

Hi,

My client is running a Tomato commission Mundi, His Gross Commission is 80lacs. He also provide Vehicle on hire, his receipts from hiring vehicles is 35 lacs. Does he require Tax audit

Does Commission Agency fall under Profession or Business activity.

Also he has declared Netprofit of 20%

Pls clarify

 

Replies (2)
Dear Ravi

Reply to first question is he is under tax audit.commision agency will not fall under profession. however a business income


You can also write to me with further details at sthayin @ gmail.

1. In your case, if you are running a business of selling tomato for commission and hiring of the vehicle under the same name or PAN, then aggregate receipt during the year comes to Rs. 1.15 crores.  
2. As per the above angle, tax audit u/s 44AB will be applicable. 
3. Now with respect to the determination of whether commission income is a business or profession. In many cases, the IT department has given a clear clarification that any income can be classified as a profession only when the same is earned out of a specified set of skills and knowledge which can be categorized as unique and different to the case to case basis. By going by this definition commission earned on selling tomato will not be considered as a profession and hence it should be categorized as business income. 
4. He is required to carry out tax audit u/s 44AB. However, he can also opt to pay tax under presumptive taxation u/s 44AD and as well as sec 44AE (in case of hiring of the vehicle). However, not sure how both can opt at the same time in ITR. 
Please correct me if the above solution has an alternative view. 


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