Speculation Income under no accounts or presumption case
This query is : Resolved
31 May 2024
I have a speculation income from intraday trade of 5 lacs and speculation turnover in 575000 and my short term capital gain is 300000 then I should should what speculation income in ITR 3 , 500000 under no account case or presumptive u/s 44ADA @6% of 575000. Please guide me.
31 May 2024
Declare it under presumptive assessment u/w. 44AD IT act.
But you will be compelled to adopt the sec. 44AD for next FIVE years, otherwise tax audit will be applicable.
But you will be compelled to adopt the sec. 44AD for next FIVE years, otherwise tax audit will be applicable.
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31 May 2024
just one addition before you choose to go under 44AD, please read the conditions for opting in and opting out of presumptive taxation. Returns in speculative trading vary a lot on year to year basis and often presumptive taxation can work against your interests.
01 June 2024
One more thing to add, experts may correct me .
If you go under presumptive taxation its not that you need to show exact 6%, if profit is higher you need to show the higher amount and not 6%.
Turnover 5.75 Lacs & Profit 5 Lacs - then in Income Tax Return you need to show Income as 5 Lacs and not 34,500/- i.e. 6% on 5.75 Lacs
If you go under presumptive taxation its not that you need to show exact 6%, if profit is higher you need to show the higher amount and not 6%.
Turnover 5.75 Lacs & Profit 5 Lacs - then in Income Tax Return you need to show Income as 5 Lacs and not 34,500/- i.e. 6% on 5.75 Lacs
01 June 2024
Bhavik. That is not correct. Whether the profit is here or not, it is at the option of the assessee to decide what he wants to offer.
01 June 2024
There are judgments wherein it is held that If Income earned is higher compared to presumtive income than higher income should be offered to taxation
In case of Loss definetly percentage as prescribed u/s Sec 44AD/ADA will be applicable.
In case of Loss definetly percentage as prescribed u/s Sec 44AD/ADA will be applicable.
01 June 2024
The above discussion puts me in doubt that is why I raised it? It’s back to square one!
Choosing makes a big change in tax liability!
Choosing makes a big change in tax liability!
01 June 2024
If more clarification can be offered with case laws.
01 June 2024
Section Says - Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession"
8/6% OR as the case may be a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee
8/6% OR as the case may be a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee
01 June 2024
That means the option is with asaesse to choose 6% or higher and not compulsion.
Term may be I think gives option .
Term may be I think gives option .
01 June 2024
Please clarify on this as expert opinions are also different.As an assessed naturally I would like to go with 6% but do not wish to get in trouble in future.
01 June 2024
Bhavik. Can you please share the judgment? And do explain how did you arrive at higher profit figure in absence of books of accounts?
@arvind ji. You can go ahead with showing 6% profit in this case. But be clear about conditions for opting in and opting out in case you have losses in future.
@arvind ji. You can go ahead with showing 6% profit in this case. But be clear about conditions for opting in and opting out in case you have losses in future.
01 June 2024
See the issue is that you are focussing on the word "shall" but the core of the section of "claimed to have been earned by the assessee." It is not open for the income-tax department to go for best judgement assessment. That is how the word Shall operate here.
01 June 2024
I will share the Judgements on Personal Chat to close this thread and if the assessee knows that he has earned a Higher Amount that can be construed that he has maintained books of account which contradicts sec 44ad main purpose.
01 June 2024
https://www.caclubindia.com/judiciary/effect-of-section-44ad--272.asp
01 June 2024
well basically, you are only proving what we all said. That you just claim 6% or 8%. there is no need to disclose higher income and Income-tax authorities cannot question it.
01 June 2024
Thanks on the basis of above discussion I should conclude that should go with 6% presumptive method u/s 44AD and continue in next 6 years .I suppose no accounts are required to be maintained if go u/s 44 AD. and balance sheet to be submitted.
02 June 2024
It says” this provision allows the assessee to declare the higher income at his option (higher than the prescribed rate of 6%”
I suppose this means that minimum 6%!is mandatory and higher at his option which shall not be questioned.
I suppose this means that minimum 6%!is mandatory and higher at his option which shall not be questioned.
04 June 2024
If assessee knows that he has earned higher income than 6% then he has maintained Books of Accounts and even case of F&O or Intraday transactions Profit/Loss is calculated by the Broker, in such scenario showing lesser income definetly proves the willfull mis interpretation nature of transaction,
I am still of the Opinion that Higher Income should be reported while filing Income Tax Return.
Section does not state that you only have to show 6% profit.
I am still of the Opinion that Higher Income should be reported while filing Income Tax Return.
Section does not state that you only have to show 6% profit.
04 June 2024
Bhavik. see this way..broker calculates only gross profit. You need to account for all other expenses that the asssessee has incurred - right from internet expenses, to data charges etc etc. The whole idea of 44AD is that we do not maintain any books..we do not keep any records..we do not know any profit. The language of act is to allow a person to offer more income, if they wish to! else, just offer 6%/8% and be happy.
No need to over complicate the simple language that the act has provided.
No need to over complicate the simple language that the act has provided.
04 June 2024
Yes Nikhil, Gross is calcuated assuming in this case its 5 lac profit , so even if you consider all expenses, it wont reduce the profit to 6% of Turnover.
Definetly you can consider the expense but it should be reasonable.
Definetly you can consider the expense but it should be reasonable.
04 June 2024
again..as I said..do not complicate what is very simple. The whole purpose of 44AD/ADA etc is to make it simple for small businessmen to comply with tax laws (read the explanation note on 44AD when it was issued). hence, the clauses that provide for reasonablity etc are already excluded by making section 28 to 43c not applicable. Do not over think and atleast not beyond the boundaries of the Act.
04 June 2024
With all due respect, Sir you can say your opinion and I am not enforcing my opinion on you , I do expect same thing from you.
I am thinking or overthinking or it is different interpretation of law by 2 different individuals.
I said my view to the Querist so in future he does not fall in a trouble and if law so simple querist won't have asked a question.
and yes again I am also saying he knows he has earned this profit and he has maintained books of accounts without which he cannot ascertain the profit amount which curbs the main intention of the Section.
I am thinking or overthinking or it is different interpretation of law by 2 different individuals.
I said my view to the Querist so in future he does not fall in a trouble and if law so simple querist won't have asked a question.
and yes again I am also saying he knows he has earned this profit and he has maintained books of accounts without which he cannot ascertain the profit amount which curbs the main intention of the Section.
04 June 2024
No intention to impose anything. but very a desire to ensure that incorrect opinions are curbed. What you call as maintenance of books of accounts, a ledger/broker's statement is not my books of accounts. It is a document that the broker generates. Thats all. If your logic is accepted than anyone with more than 20 lakhs turnover, cannot use 44AD as provided because your GST records (which actually are created and maintained by you) are the proof of your income!
Think about all this and then see how your opinion holds. If you still have the same beliefs, go ahead and share it with your clients. But do read the memorandum to Finance Bill for this.
Think about all this and then see how your opinion holds. If you still have the same beliefs, go ahead and share it with your clients. But do read the memorandum to Finance Bill for this.
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