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APPLICABLE OF TAX AUDIT U/S 44AB

TRILOCHAN (SENIOR ACCOUNTANT) (698 Points)

13 February 2010

Dear sir,

I want to confirm you that, i am working in a proprietorship concern, the proprietor is the owner of two concern, during the financial year,his receipt from construction business is 30lakh and from professional concern 14 lakh, we are going to prepare separate balance sheet and P/l account for both the concern, Pls confirm me whether TAX audit is applicable,for both the concern.

if receipt from construction business is 35 lakh and from profession 8 lakh then what is the answer?

Please reply me

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15 Replies

Ashish Sharma (Service) (1028 Points)
Replied 13 February 2010

AUDIT OF ACCOUNTS OF CERTAIN PERSONS CARRYING ON BUSINESS OR PROFESSION.

Every person, - (a) Carrying on business shall, if his total sales, turnover 711 or gross receipts, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year, or

(b) Carrying on profession shall, if his gross receipts in profession exceed ten lakh rupees in any previous year, or

So as per above defination the turnover counted separately for sales and business , and the business which reach at specified limited has to be audited. no need for tax audit if the receipt or sale not reach at specified limit above said

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Amir (Learner) (4016 Points)
Replied 13 February 2010

Dear Trilochan,

Case 1 - Business 30L & Profession 14 L

Since receipts from Construction business (assuming Civil Construction) are less then 40 Lakhs, then Provision of Presumptive taxation will apply u/s 44AD & Income will be computed @ 8% of Gross receipts...

Now if u r ready to show ur Income @ 8% then no need to get Tax Audit done in respect of Construction business...Tax Audit will be required only for Professional firm...

But if u challenge that ur Income of Construction Business is less then 8% of Gross receipts then, u r required to get Tax Audit of business as well as profession..

Case 2 - Business 35L & Profession 8L

Tax Audit is not required neither for business nor for profession since the individual threshold limit for business(40L) as well as profession(10L) has not exceeded..

C.Balaji (Learner) (1867 Points)
Replied 13 February 2010

Mr.Amir i have a doubt....

If it is a business not covered u/s 44AD,AE,AF... then 35L and 8L ??? Tax Audit - yes or no....

Please clarify....

Amir (Learner) (4016 Points)
Replied 13 February 2010

Dear Balaji,

Business receipts = 35 Lacs (Not covered by Presumptive Taxation)

Professional Receipts = 8 Lacs

Tax Audit is not required.............

C.Balaji (Learner) (1867 Points)
Replied 13 February 2010

Mr.Amir i'm still not clear...

Let me put this way...

A properietor...carries on two business....both not covered under presumptive tax basis....

T.O. - B1 - 28 lacs....B2- 20lacs.....

Tax Audit required to be done or not.....Is Tax audit should be done only if the T.O of a business or Individual exceeds Rs.40lacs????

Confused??.<<< @ @ !!!

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Amir (Learner) (4016 Points)
Replied 13 February 2010

Dear Balaji,

If Both are businesses then Tax Audit will be applicable...

I gave the answer in respect of 1 business & other is profession...

2 Like

C.Balaji (Learner) (1867 Points)
Replied 13 February 2010

Yes.... sorry...... i didn't see that wordings.......

Thank You very much.....dear brother........

Chintan Shah (-) (534 Points)
Replied 13 February 2010

Dear Trilochan,

If the Turnover of business is Rs. 35 Lacs and the gross reciepts of profession are Rs. 14 Lacs, the books of account of both the concern need to be audited as Section 44AB states that:

Every Person -

a. carrying on business shall, if his total sales turnover, ...................or,

b. carrying on profession shall, if his gross reciepts in profession.......

c. ........................................................................................................................

get his accounts of such previous year audited by an accountant............

Therefore if any of the conditions out of a, b or c are satisfied the assessee has to get all books of accounts from all business or professions audited. Even the guidance note on tax audit issued by the ICAI supports this view......

RAKESH (Almost CA) (2199 Points)
Replied 13 February 2010

if both are business then liable for tax audit .

RSK070 (CONSULTANT) (233 Points)
Replied 04 June 2010

What if one business if retail trade having turnover of Rs.35 lacs ( in which 44AF is adopted) and another is a small manufacturing unit having turnover Rs. 6 lacs. Then will tax audit come.

Pls reply

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Amir (Learner) (4016 Points)
Replied 04 June 2010

Dear Sir,

No, becos this buget has proposed to increase the Turnover limit to 60 Lacs.

If we modify ur question as per the new limits then Yes, tax audit will be required. (i:e 55 Lacs & 6 Lacs)

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB) (9060 Points)
Replied 04 June 2010

1st case : business 30 lacs and profession 14 lacs than tax audit is applicable only to profession and not business

2nd case : business 35 lacs and profession 8 lacs than tax audit is not applicable

MILIND SHAH (ARTICLE) (21 Points)
Replied 30 June 2010

I'm engaged with business of stock broking firm & my net profit/loss is less than Rs 4000000 but my turnover is more than Rs 4000000 so am I liable for tax audit

Shudhanshu Agrawal (Business) (2570 Points)
Replied 30 June 2010

The original question was nicely answered by Amir. But the point which i found in discussion that in case of preassumption basis u/s 44AD or 44AE shall be take the turnover of 2 businesses seprately or collectively.

I want Amir's reply on it.