Audit
This query is : Resolved
28 April 2010
I am trading in shares (intraday) and
am going to have a sale of more than 60 lakhs for A.Y. 11-12.
Do I have to get my accounts audited by a CA as per law?
am going to have a sale of more than 60 lakhs for A.Y. 11-12.
Do I have to get my accounts audited by a CA as per law?
28 April 2010
In case of intraday trading turnover for the purpose of section 44AB is profit + loss on trading and not the actual turnover of purchase & sale.
So if the same exceeds Rs. 60 lakhs then u are liable for audit u/s 44AB which will be done by a CA.
So if the same exceeds Rs. 60 lakhs then u are liable for audit u/s 44AB which will be done by a CA.
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28 April 2010
agreeed....
in intraday only the net result is considered and not the turnover.... Be sure that its in shares and not F&O... or else the calculation and sceanario is different...
ANd than your income will be considered as business income also.... cant change in future than .
in intraday only the net result is considered and not the turnover.... Be sure that its in shares and not F&O... or else the calculation and sceanario is different...
ANd than your income will be considered as business income also.... cant change in future than .
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28 April 2010
Dear Shivang
How is that for the purpose of turnover in intraday & F & O the treatment is different? If some difference in there then kindly update me as for both intraday trading & F & O i think turnover is profit + loss.
How is that for the purpose of turnover in intraday & F & O the treatment is different? If some difference in there then kindly update me as for both intraday trading & F & O i think turnover is profit + loss.
28 April 2010
AGREE WITH ADITYA JI.
AS LITTLE AS I KNOW IT IS PROFIT + LOSS FROM BOTH TRADING IN SHARES AND ALSO F & O FOR THE PURPOSE OF TURNOVER.
FURTHER INSIGHT ON THIS WILL BE HIGHLY APPRECIATED.
AS LITTLE AS I KNOW IT IS PROFIT + LOSS FROM BOTH TRADING IN SHARES AND ALSO F & O FOR THE PURPOSE OF TURNOVER.
FURTHER INSIGHT ON THIS WILL BE HIGHLY APPRECIATED.
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28 April 2010
Hello Aditya,
For shares net of profit and loss account is calculated.( 100 profit and 50 loss than its 50 )
while for F&O it is total of favourable and unfavourable. i.e. if 100 profit and 50 loss than total 150 is considered..
For shares net of profit and loss account is calculated.( 100 profit and 50 loss than its 50 )
while for F&O it is total of favourable and unfavourable. i.e. if 100 profit and 50 loss than total 150 is considered..
28 April 2010
Did't get you. Could u please elaborate.
In case of share trading if one day profit is Rs. 100 and other day loss is 50 then turnover is Rs. 150 i think
In case of share trading if one day profit is Rs. 100 and other day loss is 50 then turnover is Rs. 150 i think
28 April 2010
SHIVANG JI
AS FAR AS I KNOW EVEN FOR SHARES BOTH FAVORABLE AND UNFAVOURABLE ARE TAKEN TOGETHER I.E. 100 PROFIT +50 LOSS=150 FOR THE PURPOSE OF TURNOVER.
AS FAR AS I KNOW EVEN FOR SHARES BOTH FAVORABLE AND UNFAVOURABLE ARE TAKEN TOGETHER I.E. 100 PROFIT +50 LOSS=150 FOR THE PURPOSE OF TURNOVER.
28 April 2010
I agree to you both, but its heard only and nowhere written...
In assessments i have personally appeared for the assessee and have presented like this and the matter was solved.
In the case of intraday of share, as we know that net of profit/loss is considered...so when we calculate sciptwise the net profit /loss is calculated. and after setting off loss against the profit, the net will be considered.. that is net profit..(30 lacs profit and 20 lacs loss than it is 10 lacs profit and tax audit not applicable)...Normally Tax audit never comes in this situation....
FOR F&O, the total of profit and loss is considered and its added up... if profit is 30lacs and loss is 20 lacs than total 50 lacs is considered and tax audit is applicable.....
In assessments i have personally appeared for the assessee and have presented like this and the matter was solved.
In the case of intraday of share, as we know that net of profit/loss is considered...so when we calculate sciptwise the net profit /loss is calculated. and after setting off loss against the profit, the net will be considered.. that is net profit..(30 lacs profit and 20 lacs loss than it is 10 lacs profit and tax audit not applicable)...Normally Tax audit never comes in this situation....
FOR F&O, the total of profit and loss is considered and its added up... if profit is 30lacs and loss is 20 lacs than total 50 lacs is considered and tax audit is applicable.....
28 April 2010
Thanks for sharing your experience. It opens a new facet which needs to be looked at and which will benefit all of us.
Regards
Regards
28 April 2010
You can read the guidance note on tax audit where it states for the purpose of turover in speculative transactions as
In the case of an assessee doing speculative transactions there can be both positive and negative differences arising by settlement of various such contracts during the year. Each transaction resulting into whether a positive or negative difference is an independent transaction. Further, amount paid on account of negative difference paid is not related to the amount received on account of positive difference. In such transactions though the contract notes are issued for full value of the purchased or sold asset the entries in the books of account are made only for the differences. Accordingly, the aggregate of both positive and negative differences is to be considered as the turnover of such transactions for determining the liability to audit vide section 44AB.
In the case of an assessee doing speculative transactions there can be both positive and negative differences arising by settlement of various such contracts during the year. Each transaction resulting into whether a positive or negative difference is an independent transaction. Further, amount paid on account of negative difference paid is not related to the amount received on account of positive difference. In such transactions though the contract notes are issued for full value of the purchased or sold asset the entries in the books of account are made only for the differences. Accordingly, the aggregate of both positive and negative differences is to be considered as the turnover of such transactions for determining the liability to audit vide section 44AB.
28 April 2010
With regards to what u represented to the department somtimes some things are skipped by the A. O. also which is a common feature and in the end the interest of the client should be saved and i had also represented something to the department though was wrong but had still won on it.
28 April 2010
I totally agree with you( Aditya).. i dont deny..
When you interprete it, its written that....
In such transactions though the contract notes are issued for full value of the purchased or sold asset the entries in the books of account are made only for the differences. Accordingly, the aggregate of both positive and negative differences is to be considered as the turnover of such transactions.
SO we can say that its the net of profit and loss.. in short total profit from it. but this method is for shares.
Also sometimes AO may not be knowledgable. but I have presentted this to CIT(A). and they gave green signal to it.
And we can easily prove that its not a specualtion if given a chance... Even a intra-day transacitons can be considered as a short term capital gain and not specualtion profit/loss..... its very easy...
SO i follow the method which i said above...
When you interprete it, its written that....
In such transactions though the contract notes are issued for full value of the purchased or sold asset the entries in the books of account are made only for the differences. Accordingly, the aggregate of both positive and negative differences is to be considered as the turnover of such transactions.
SO we can say that its the net of profit and loss.. in short total profit from it. but this method is for shares.
Also sometimes AO may not be knowledgable. but I have presentted this to CIT(A). and they gave green signal to it.
And we can easily prove that its not a specualtion if given a chance... Even a intra-day transacitons can be considered as a short term capital gain and not specualtion profit/loss..... its very easy...
SO i follow the method which i said above...
29 April 2010
Thanks to all three of you. Not only is my query resolved, but the subsequent discussion was quite interesting and illuminating.
29 April 2010
You are welcome.
29 April 2010
I think it was a very comprehensive discussion on the topic.
29 April 2010
agree with aditya..... Anyways thanks for knowledge sharing....
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