Applicability of Section 44AB

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

12 September 2010 A firm has a turnover of Rs. 32 Lacs and Purchase during the year of Rs. 42Lacs.

Pls guide whether tax audit u/s 44AB applicable or not

CA Amit Joshi

CA Amit Joshi (Expert)
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12 September 2010 For AY 2010-11 Tax audit u/s 44AB is applicable. As per IT Act if purchase is more than 40Lks than also provisions of 44AB applicable.
For AY 2011-12 the limit will be 60 Lks so it is not applicable.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 September 2010 Sales,Turnover ,gross receipts for the purpose of section 44AB does not include purchase vale. Hence tax audit as per referred section does not apply for the cited issue.

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Querist : Anonymous

Querist : Anonymous (Querist)

12 September 2010 Sir is there any criterion for difference betweeb sale and purchase for tax audit purpose.
e.g if the purchase is 50 lacs but sale is only 30 lacs then will tax audit applicable or not

CA Amit Joshi

CA Amit Joshi (Expert)
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12 September 2010 But B.Chackrapani Warrier Ji as per Supreme Court in CIT Vs Vijay Maheshwari(HUF) [1997]228 ITR (st.) 157 SC " The expression 'turnover' in section 44AB denotes Purchase or Sales both."

CA Amit Joshi

CA Amit Joshi (Expert)
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12 September 2010 So as per the above judgment of SC if purchase exceed the limit even sales is low than also provisions of 44AB will applicable.
So if purchase is 50Lks and Sales is 30Lks than also 44AB will applicable.

Querist : Anonymous

Querist : Anonymous (Querist)

12 September 2010 But Sir In tax audit report, under Annexure-1, for Gross Turnover we take only the sale figure and not purchase.

Pls explain