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Transactions between related Proprietorship Firms

Tax queries 181 views 5 replies

Rajesh Nahar

79 Points Joined March 2012

I am having two proprietorship firms - one is under my name and another one under my HUF name in which I am karta. Both are of course under different PAN Nos and GST nos. One of the firms is under Audit in the current Assessment year, the other one is not.

Are transactions allowed between these two firms and if we do sale purchase between these two firms will there be any issue in Income tax audits and GST Audit?

Replies (5)

RAJA P M

"Do the Right Thing...!!!"

128121 Points Joined January 2015

Transactions (sale & purchase) will treat as sale & purchase with tax then no more issues...

CA Raj Doshi

Practising CA

8944 Points Joined December 2013

If the entity under audit is purchasing goods from the non audit entity, Transaction will be required to reported under tax audit report. Also, the products should be sold at a price which is sold to other unrelated customers also OR there should be some reasonable profit margin.

annu Goyal

1102 Points Joined December 2019

In case of GST if proper sale and purchase are made with tax then there is no issue as both are shown in there respective returns.
In case of tax audit purchase will report.