How the turnover of the derrivative transaction calculated for the pupose of 44AB. bcoz in practicle the accounting of the derrivatives done on the net income or loss basis. so the problem is that how the turn over shoud be calculated ?
2 Replies
CA Annie
(Chartered Accountant )
(747 Points)
Replied 11 September 2008
Since this is a business income which is chargeable under the head profits and gains of business or profession an audit will be required under Section 44AB of the Income-Tax Act, 1961 if the turnover exceeds Rs 40 lakh.
if the purchase and sale of shares are delivery based (take delivery of the shares purchased and also deliver the shares at the time of sale), the gross sale value has to be taken as the turnover.
If the transactions in shares are non-delivery based (do not take delivery of the shares and these transactions are speculative in nature), it is only the net of the sales and purchases that is to be treated as turnover
Sharun
(Doing CA Final)
(24 Points)
Replied 11 September 2008
As Annie said the turnover will be the total of the net of sale and purchase
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