Search Results For: tax audit


QUERY: Mr. Champaklal seeks further advice from you on behalf of his clients.

(a) One of Mr. Champaklal’s clients is a financier and he has asked him whether section 194A would apply to Bill Discounting Charges paid by him to another financier. Mr. Champaklal seeks your advise in the matter

(b) The same financier client of Mr. Champaklal also wants to know whether the difference between price and face value of Commercial Paper is to be treated as interest or as discount. Mr. Champaklal seeks your advice in this matter also.

(c) Taking a cue from an exporter whose writ petition (in respect of 80HHC matter) had been handled by him. Mr. Champaklal has started the practice of levying interest in his Memo of Fees itself in respect of some of his regular clients who are regularly irregular in payment of his fees. His clients have enquired as to whether they would be liable to deduct tax at source u/s. 194A in respect of the interest charged by him.

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CBDT Cir.No. 65{F. No. 275/79/TTJ] dt. 2/9/71.

“Where the supplier of goods makes over the usance bill/hundi to his bank which discounts the same and credits the net amount to the supplier’s A/c. straightway without waiting for realization of the bill on due date,

QUERY: ‘A’ runs TV repair shop. His gross receipt are Rs. 1,80,000/- and net income is Rs. 1,35,000/- more than 8% of the gross receipts. So section 44AD of the Act is applicable to him. Can he file ITR 4-S, for the assessment year 2011-12?
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Yes, he can file ITR 4-S, as section 44AD is applicable to him. Tax audit requirement would not apply in respect of business covered

QUERY: ‘X’ is engaged in business of sale of liquor. His turnover is 40 lakhs during the financial year 2010-11. The turnover is inclusive of sales tax. Now for the purpose of section 44AD of the Income-tax Act, 1961 whether total turnover or gross receipt will include sales tax? Will it make any difference, if sales tax is credited separately.
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Section 44AD, would be applicable for the assessment year 2011-12 if total turnover or gross receipt of ‘X’ does not exceed Rs. 60/- lakhs. For sake of consistency, ‘X’ should follow the same accounting policy from year to year.

QUERY: Mr. X a practicing Advocate who is subject to Tax Audit u/s. 44AB for the year ending March 31, 2008 having the following transactions during the financial year 2009-10

1. Constructed a house for self occupation & he is making payment to contractor Rs. 10,00,000/-.

2. Making payment to Architect for designing his house Rs. 1,00,000/-.

3. Borrowed funds from friends Rs. 10,00,000/- on which he wants to pay the interest.

Examine the applicability of TDS.
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1. Section 194(C) provides that no individual or HUF shall be liable to TDS on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purpose of such individual or any member of HUF.

QUERY: Radiology & pathological laboratory run by a physician (M.D./ M.B.B.S. not specialized in radiology or Bio-chemistry) will be considered as profession or business for limits of tax audit?
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S. 2(13) of the Income-tax Act, 1961 defines ‘business’ which includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The word ‘business’ is one of wide import and it means activity carried on continuously and systematically by a person by the application of his labour or skill with a view to earning an income.

QUERY: The Government of Maharashtra have appointed authorised Stamp Vendor to sell stamp papers and other stamps at fixed rate of commission and he purchases stamp papers from stamp office after deducting his commission amount from value of Stamp paper. The total stamp paper purchased during the year exceeds Rs. 60 lakhs in F.Y. 2011-12 but commission amount is approximately Rs. 2 lakhs. Whether provision of section 44AB is attracted?
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Section 44AB reads as “every person carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds sixty lakh rupees in any previous year”.

Thus, the section refers only to credit side of Profit & Loss account

QUERY: A is having salary of about Rs. 30 lakhs. He has also done F & O transactions in shares. As per guidance note on tax audit of ICAI total of favourable and unfavourable differences shall be taken as turnover in F & O transaction. For A.Y. 2013-14 favourable difference is 80 lakhs and unfavourable difference is Rs. 10 lakhs, hence, A has paid income tax on Rs. 70 lakhs. Whether A is required to maintain books of account and get tax audit or can A claim that he does not maintain books of account, and offer business income @ 8% of Rs. 70 lakhs as per section 44AD?
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The Guidance Note on Tax Audit under section 44AB of the Income-tax Act, 1961 states that in case of Derivatives, Futurer and options the difference between total favourable and unfavorable is to be considered as turnover for the purpose of deciding the limit under section 44AB of the Act.