Appliicability of tax audit in case of loss under f and o

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Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2015 Dear sir,

My client has incurred a loss of Rs. 1350000 in Future and option transaction carried on through recognized stock exchange. He has an income from capital gain and normal business of around Rs. 12 lacs. and as per i.i. act if f and o transactions carried on through recognized stock exchange then it would be treated as business income or loss. And if i would consider it as business loss then all other income under different heads would be sett off against it and there would be loss of Rs. 1.5 lacs after set off. In this case do we need to get his accounts audited under sec 44AB..?

Please reply.

Amol S Joglekar

Amol S Joglekar (Expert)
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27 September 2015 Find out the +ve difference in FNO transaction. If it is exceeding 1 crore, then tax audit is required to be done irrespective of profit(Loss)

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2015 Dear sir,
Total Turn over (+ve Difference) in F & O is around Rs. 35 lacs. ie. less than 1 crore. As per sec 44AD, if turnover is less that 1 crore and profit is less than 8% that audit is required subject to total income exceeds basic exemption limit. In this case, total income exceeds basic exemption limit before set off but after set off against loss, it would be Rs. 0..

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Amol S Joglekar

Amol S Joglekar (Expert)
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27 September 2015 FNO is 35 lakh, ok.
What about the turnover of that other business having income of 12 lakh?

Both added together : crossing 1 crore?

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2015 No.. Turnover of other business is Rs. 14 lacs. Capital gain of Rs. 6.00 Lacs and House property income is of Rs. 1.5 Lacs.

Amol S Joglekar

Amol S Joglekar (Expert)
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27 September 2015 Sec 44 AD (5) : Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

Your case falls outside the purview of this and hence tax audit is NOT applicable.

(A contrary view is given by some CA. They are of the opinion that once 8% limit is vitiated, tax audit becomes compulsory)

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2015 Yes but in software, it shows as normal return and it treats it as belated return and would not allow to carry forward losses..

Amol S Joglekar

Amol S Joglekar (Expert)
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27 September 2015 which software you are using? "winman" allows it so to do.

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Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2015 I am using ICAI TAX SUITE..

Amol S Joglekar

Amol S Joglekar (Expert)
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27 September 2015 try out the downloaded itr from income tax website. They are allowing.

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2015 Ok sir.. Thanks a lot..

Amol S Joglekar

Amol S Joglekar (Expert)
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27 September 2015 You are most welcome..
.
.

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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27 September 2015 well any return that you file after 7 september 2015 without being a audit case wont allow you carry forward of remaining loss irrespective of what your software allows you to do or not.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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28 September 2015 +ve of F & O = 35.00 lakhs
-ve of F & O = 13.50 lakhs

Turn over for the purpose of 44AB (a) is the absolute value of the above two = 48.50 lakhs.

Being < 1 crore audit u/s 44AB(a) is not required.

Total income of the assessee is (-) 1.50 lalks, hence audit u/s 44AB(d) r.a.w 44AD(5) is not mandatory.

Loss can't be carried forward since the due date was 7th September.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2015 Thanks a lot sir......

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