17 August 2010
Depends on the method of accounting employed. For example, if sales tax(now vat) collection is accounted in a separate account and payment is also debited in that account, for tax audit purpose turn over will be considered as 39/- lakhs only.
TOTAL SALES MEANS TOTAL OF ALL SALES I.E ENTIRE CASH RECD AGAISNT SALE PRICE REDUCED BY AMOUNT COLLECT ON BEHALF OF THIRD PARTY OR OBLIGATION LIKE VAT.
READ THE BELOW PARA OF CASH REGARDING THIS.
The expression 'total sales: turnover: 'gross receipts' appear to have been used loosely and not without any amount of deliberateness as to their scope, meaning and effect. Predominantly, they appear to be interchangeable. These expressions do not only overlap, but might confuse an assessee. For example 'total sales' means total of all sales: 'turnover' also means aggregate of sales: 'gross receipts' means similarly, entire cash received as sale price. These expressions have the sting of overlapping & convey analogous meaning. Though the expression 'total sales' carries a definite concept about it the other two expressions lack such concept whose construction and meaning depends upon the context and the subject matter. These expressions, therefore, in the context of Section 44AB be read as conveying idea proximate to what 'total sales' conveys. The decision of the Supreme Court in M.K. Ranganathan v. Govt. of Madras, AIR 1955 SC 604 indicates that a word is known by the company it keeps. The Supreme Court observed thus:-
"It is well recognized rule of construction that when two or more words are susceptible of analogous meaning are coupled together noscunter a sociis, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, that is more general is restricted to a sense analogous the legs general (Maxwell Interpretation of Statute, 10th edition, P.332. (P.609)
'Total Sales; 'turnover' and 'gross receipts' may broadly mean gross in flow of cash receivable and other consideration arising in the course of ordinary activities of an enterprise from the sale of goods or from the rendering of services. It is measured by the charges made to customers or clients for goods supplied or Services rendered to them and by the charges and rewards arising from the use of sources by them. It should, however, exclude amounts collected on behalf of the third parties trusts or obligations
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