Scrap business

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RAJEEV (Querist)
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28 May 2013 hi friends

pls tell me how to maintain books of a/c person have business of scrap purchase and sell but doesnt issue invoice for such.

so how can we assess his income from such business. i hav to file his income tax return

thanks

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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28 May 2013 such kind of many cases are there.
they dont keep any books of accounts and simply show profit.

RAJEEV

RAJEEV (Querist)
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28 May 2013 tnx for your reply

so now wht i hv to do, for filing his return of income

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CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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28 May 2013 simply show the profit as per your best estimate and prepare books of accounts.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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29 May 2013 You have to keep some records otherwise how you will be able to ascertain your turnover. At the time of selling scrape you are getting it weighed on a weigh bridge or any other weighing maser. Take the sales turnover and multiply with average selling rate you can arrive to your sales target and for the same quantity you apply the average purchase rate and find out the profit. Noq, you may say what about stock. In this case we will not take any stock as it has not been included in purchases and only net sales has been taken as sales by quantity and the same quantity has been taken as purchases. You can take the shelter of section $$AD and show minimum profit of 8% or 5% as the case may be. for income tax purpose. But once your turnover increases and touches the tax audit limit you will be in trouble.