Applicability for Section 44AB
This query is : Resolved
31 July 2008
Facts of the Case:
Status of Assessee : Individual
Profession : Doctor
Gross Receipts
from profession : Rs.9,75,000/-
Net Income from
Profession : Rs. 4,76,000/-
Assessee also deals in sale and purchase of shares on NSE & BSE through a broker on daily basis i.e. intraday and inter day transactions on which STT is deducted broker also charges interest on late payments.Total transactions in the year 2007-08 exceeds Rs. 60,00,000/-. Assessee incured a loss of Rs. 3,79,000/-.
Query:
1). Whether loss on NSE and BSE transactions be treated as Capital loss or Business loss.
2). Whether loss can be carried forward?
2). Whether Tax Audit is applicable?
3). If Tax audit is applicable than in which form audit report is to be given?
4). What will be the status if Receipts from profession is Rs. 11,00,000/-?
Please resolve the query
Reply to : camksolan@yahoo.co.in
Status of Assessee : Individual
Profession : Doctor
Gross Receipts
from profession : Rs.9,75,000/-
Net Income from
Profession : Rs. 4,76,000/-
Assessee also deals in sale and purchase of shares on NSE & BSE through a broker on daily basis i.e. intraday and inter day transactions on which STT is deducted broker also charges interest on late payments.Total transactions in the year 2007-08 exceeds Rs. 60,00,000/-. Assessee incured a loss of Rs. 3,79,000/-.
Query:
1). Whether loss on NSE and BSE transactions be treated as Capital loss or Business loss.
2). Whether loss can be carried forward?
2). Whether Tax Audit is applicable?
3). If Tax audit is applicable than in which form audit report is to be given?
4). What will be the status if Receipts from profession is Rs. 11,00,000/-?
Please resolve the query
Reply to : camksolan@yahoo.co.in
01 August 2008
Check Provisions regarding Speculation Business.
01 August 2008
Querywise reply is as under:
1. The loss from share trading may be business loss or capital loss. The treatment depends upon the nature and volume of trades and the intention of the person who has dealt in such activity. In the instant case, the volume and the intra day and inter day trading suggests that it the adventure in the nature of trade and as such be treated as business activity and consequently loss from such business.
2. Yes, loss can be carried forward.
3. You have to consider the business turnover for the purpose of tax audit u/s 44AB as the receipts from profession are less than 10lacs. Also, the turnover from intraday and interday may be considered by summing up the delivery based purchases or sales or the profit and loss from intraday trading. In case any of these exceeds 40 lacs then Tax Audit is to be conducted otherwise not.
4 Report will go on 3CB and 3CD.
5 In case the receipt from profession is 11lac then also Tax Audit is required. It is noteable that in case the turnover or gross receipt from any of the activity exceeds the prescribed limits of 44AB, Tax Audit is required and you have to cover all activities of business under the scope of audit as section 44AB speaks for a person and not for a business activity.
Moreover, the loss from business may be analysed whether it is speculative or non speculative. In case, it is speculative then it will be c/f u/s 73 otherwise u/s 72.
1. The loss from share trading may be business loss or capital loss. The treatment depends upon the nature and volume of trades and the intention of the person who has dealt in such activity. In the instant case, the volume and the intra day and inter day trading suggests that it the adventure in the nature of trade and as such be treated as business activity and consequently loss from such business.
2. Yes, loss can be carried forward.
3. You have to consider the business turnover for the purpose of tax audit u/s 44AB as the receipts from profession are less than 10lacs. Also, the turnover from intraday and interday may be considered by summing up the delivery based purchases or sales or the profit and loss from intraday trading. In case any of these exceeds 40 lacs then Tax Audit is to be conducted otherwise not.
4 Report will go on 3CB and 3CD.
5 In case the receipt from profession is 11lac then also Tax Audit is required. It is noteable that in case the turnover or gross receipt from any of the activity exceeds the prescribed limits of 44AB, Tax Audit is required and you have to cover all activities of business under the scope of audit as section 44AB speaks for a person and not for a business activity.
Moreover, the loss from business may be analysed whether it is speculative or non speculative. In case, it is speculative then it will be c/f u/s 73 otherwise u/s 72.
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