Regarding u/s 10(26)
This query is : Resolved
09 February 2013
whether audit is required if assessee's turnover exceeds 1 crores but whose whole income is exempted u/s 10(26)?
14 February 2013
Tax Audit is based on turnover and not income.
17 February 2013
Relevant portion of Guidance note on tax audit is reproduced below
6.1. A question may arise in the case of an assessee whose income is not chargeable to income-tax by reason of a specific exemption contained in the law or otherwise, as to whether he is required to get his accounts audited and to furnish such report under section 44AB.
Such cases may cover those assessees who are wholly outside the purview of income-tax law as well as those whose income is otherwise exempt under the Act.
It is felt that neither section 44AB nor any other provisions of the Act stipulate exemption from the compulsory tax audit
to any person whose income is exempt from tax. This section makes it
mandatory for every person carrying on any business or profession to
get his accounts audited where conditions laid down in the section are
satisfied and to furnish the report of such audit in the prescribed form.
A charitable trust carrying on business may enjoy exemption under
sections 10(21), 10(23), 10(23B) or section 10(23BB) or section
10(23C) and a research association carrying on business may enjoy
exemptions under section 10(21) and section 11. A co-operative
society carrying on business may enjoy exemption under section 80P.
Such institutions/ associations of persons will have to get their accounts
audited and to furnish such audit report for purposes of section 44AB if
their turnover in business exceeds Rs.40 lakhs. But an agriculturist,
who does not have any income under the head "Profits and gains of
business or profession" chargeable to tax under the Act and who is not
required to file any return under the said Act, need not get his accounts
audited for purposes of section 44AB even though his total sales of
agricultural products may exceed Rs.40 lakhs. It may be appreciated
that the object of audit under section 44AB is only to assist the
Assessing Officer in computing the total income of an assessee in
accordance with different provisions of the Act.
Therefore, even if the
income of a person is below the taxable limit laid down in the relevant
Finance Act of a particular year, he will have to get his accounts audited
and to furnish such report under section 44AB, if his turnover in
business exceed Rs.40 lakhs.
6.1. A question may arise in the case of an assessee whose income is not chargeable to income-tax by reason of a specific exemption contained in the law or otherwise, as to whether he is required to get his accounts audited and to furnish such report under section 44AB.
Such cases may cover those assessees who are wholly outside the purview of income-tax law as well as those whose income is otherwise exempt under the Act.
It is felt that neither section 44AB nor any other provisions of the Act stipulate exemption from the compulsory tax audit
to any person whose income is exempt from tax. This section makes it
mandatory for every person carrying on any business or profession to
get his accounts audited where conditions laid down in the section are
satisfied and to furnish the report of such audit in the prescribed form.
A charitable trust carrying on business may enjoy exemption under
sections 10(21), 10(23), 10(23B) or section 10(23BB) or section
10(23C) and a research association carrying on business may enjoy
exemptions under section 10(21) and section 11. A co-operative
society carrying on business may enjoy exemption under section 80P.
Such institutions/ associations of persons will have to get their accounts
audited and to furnish such audit report for purposes of section 44AB if
their turnover in business exceeds Rs.40 lakhs. But an agriculturist,
who does not have any income under the head "Profits and gains of
business or profession" chargeable to tax under the Act and who is not
required to file any return under the said Act, need not get his accounts
audited for purposes of section 44AB even though his total sales of
agricultural products may exceed Rs.40 lakhs. It may be appreciated
that the object of audit under section 44AB is only to assist the
Assessing Officer in computing the total income of an assessee in
accordance with different provisions of the Act.
Therefore, even if the
income of a person is below the taxable limit laid down in the relevant
Finance Act of a particular year, he will have to get his accounts audited
and to furnish such report under section 44AB, if his turnover in
business exceed Rs.40 lakhs.
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