Opinion Of Eminent Legal Luminaries On Controversial Issues

What Is The Limit Of Turnover For Stamp Vendor U/s. 44AB?

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?
ANSWER: 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 i.e. sales, turnover or gross receipts. Hence, according to author, principle of ejusdem generis should be applicable and therefore to decide turnover purchases should not be considered.

The Institute of Chartered Accountants of India vide its Guidance Note on Tax Audit has clarified as under:

“A question may arise as to whether the sales by a commission agent or by a person on consignment basis forms part of the turnover of the commission agent and or consignee as the case may be. In such cases, it will be necessary to find out, whether the property in the goods or all significant risks, rewards of ownership of goods belonging to the commission agent or the consignee immediately before the transfer by him to a third person. If the property in the goods or all significant risks and rewards of ownership of goods continue to belong to the principal, the relevant sale price shall not form part of sales / turnover of the commission agent and/or the consignee as the case may be. If, however, the property in the goods, significant risks and rewards of ownership belongs to commission agent and or the consignee, as the case may be, the sale price received/ receivable shall form part of his sales / turnover”.

“Share brokers, on purchasing securities on behalf of their customers, do not get them transfer in their names but deliver them to the customer who get them transfer in their names. The same is so in case of sale also. The share brokers hold the delivery merely on behalf of his customer. The property in the goods does not get transfer to the share brokers. Only brokerage which is being accounted for in the books of account of share brokers should be taken into account for considering the limits for the purpose of section 44AB. However, in case of transactions entered into by share broker on his personal account, the sale value should also be taken into account for considering the limit for the purpose of section 44AB. The case of a sub-broker is not different from that of share broker”.

Thus, stamp vendor is not liable for tax audit u/s. 44AB of the Act, on commission income, which is less than Rs. 1 crore.
EXPERT:
SECTION(S):
GENRE:
CATCH WORDS: ,

One comment on “What Is The Limit Of Turnover For Stamp Vendor U/s. 44AB?
  1. Amit halder says:

    I am lawyer. My madhamik pass result show I want to a stamp vendor licence.and also I will apply forpractice bci licence

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Neither the author nor itatonline.org and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of itatonline.org