Gross turnover for audit u/s 44ab

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Bibhu Prasad Mohapatra (Querist)

13 October 2011 As per Tax Audit u/s 44AB what will be the Gross Turnover for a Service Company with following income;

Service Income : Rs.59,00,000/-

Interest from Investments: Rs. 48,000/-

Income from Delayed Payment from Customer: Rs.63,000/-

Income from Scrap Sale: Rs.8,000/-

ADVOCATE CA MOHIT SURESH GUPTA

ADVOCATE CA MOHIT SURESH GUPTA (Expert)

13 October 2011 the gross turnover shall be Rs 59,71,000/-

Bibhu Prasad Mohapatra

Bibhu Prasad Mohapatra (Querist)

15 October 2011 Income from Delayed payment is how related to Business Income as there is no certainty for this receipts.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

26 July 2024 To determine the **Gross Turnover** for the purpose of tax audit under Section 44AB of the Income Tax Act, 1961, you need to consider the definition of "gross turnover" in the context of the audit requirements. Section 44AB mandates that the gross turnover should include all receipts derived from business operations and not just the primary service income.

Here's how you would compute the gross turnover for the service company with the given income components:

### **Components of Gross Turnover:**

1. **Service Income**: ₹59L
2. **Interest from Investments**: ₹48K (This is not included in gross turnover as it is considered other income, not part of the business turnover)
3. **Income from Delayed Payment from Customer**: ₹63K (This should be included as it pertains to the business activity, though it might be considered as a business receipt)
4. **Income from Scrap Sale**: ₹8K (This should be included as it is derived from the business operations)

### **Calculation of Gross Turnover:**

1. **Service Income**: ₹59L
2. **Income from Delayed Payment**: ₹63K
3. **Income from Scrap Sale**: ₹8K

Add these components to compute the gross turnover.

\[ \text{Gross Turnover} = \text{Service Income} + \text{Income from Delayed Payment} + \text{Income from Scrap Sale} \]

\[ \text{Gross Turnover} = ₹59L + ₹63K + ₹8K \]

\[ \text{Gross Turnover} = ₹59.71L \]

### **Exclusions:**

- **Interest from Investments**: ₹48K (Not included in gross turnover for the purpose of Section 44AB audit as it is not part of the operational revenue)

### **Summary:**

For the tax audit under Section 44AB, the **Gross Turnover** of the service company would be ₹59.71L. This figure is derived from adding the income from the primary business operations and any other relevant business-related income, excluding non-operational income like interest.

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