Whether Tax Audit required
This query is : Resolved
29 January 2009
A builder has received advance against shops to be sold at a later date from various customers amounting to Rs 80 lakhs during the year. The builder does not have any other income during the year. Is the builder required to get a Tax Audit done since the gross receipt is 80 lakhs.
29 January 2009
You have to go by the method of Recognition of Income
If the amount received as advance is like instalment towards sale then, it will be treated as sales income of the year of receipt
If the amount is received as per agreement that this amount is advance and will be adjusted only at the time of sale and until the sale is over the giver has right to get the refund of advance then the same need not be treated as income.
Based on above if it is treated as income then, Tax Audit is applicable.
If the amount received as advance is like instalment towards sale then, it will be treated as sales income of the year of receipt
If the amount is received as per agreement that this amount is advance and will be adjusted only at the time of sale and until the sale is over the giver has right to get the refund of advance then the same need not be treated as income.
Based on above if it is treated as income then, Tax Audit is applicable.
29 January 2009
B.SRINIVASULU-9900212240
Your answer is correct
Your answer is correct
08 February 2009
Yes.
It depends on the method of accounting.
If its Cash, Audit is mandatory or otherwise in case of accrual its not.
But a contrary opinion is given in "Guidance note on Tax Audit" issued by ICAI page no 12, para 12.4 where it is mentioned that audit is mandatory in such a case.
It depends on the method of accounting.
If its Cash, Audit is mandatory or otherwise in case of accrual its not.
But a contrary opinion is given in "Guidance note on Tax Audit" issued by ICAI page no 12, para 12.4 where it is mentioned that audit is mandatory in such a case.
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