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Tax audit

Rem (Practicer) (125 Points)

15 March 2017

DEAR PROFESSIONALS, EXPERTS & FRIENDS, A STAMP VENDOR IS PURCHASING AND SELLING STAMP PAPERS, HE HAS SOLD RS.1,60,00,000/- WORTH STAMP PAPERS IN THIS YEAR. WHETHER HE WILL COME UNDER TAX AUDIT PROVISION OR NOT. HE IS GETTING SMALL AMOUNT OF COMMISSION(0.05%) FROM GOVERNMENT FOR THIS. PLEASE CLARIFY ME.

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9 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (181759 Points)
Replied 15 March 2017

In this case, only commission part is taken for calculation of turnover.

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manoj (student) (5205 Points)
Replied 15 March 2017

only commision part will be turnover

file ITR U/s 44AD

Rem (Practicer) (125 Points)
Replied 15 March 2017

Sir,

Thank you for your reply. But they are purchasing, selling and keeping the stock of Stamp papers. So It is also like trading only and how it will not come under tax audit provision.

manoj (student) (5205 Points)
Replied 15 March 2017

no it will not come under tax provision only commission will be there turnover

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (181759 Points)
Replied 15 March 2017

They are not traders, but agents to Govrnmental department and hence getting commission. The rate of stamp paper is fixed by GMT. They are just collecting the sum on behalf of treasury. (Reference: Circular No. 452 [F.No.201/3/85-IT(A-II) dated 17th March 1986.]

"A question may also arise as to whether the sales by a commission agent or by a person on consignment basis forms part of the turnover of the commission agent and/or consignee as the case may be. In such cases, it will be necessary to find out, whether the property in the goods or all significant risks, reward of ownership of goods belongs to the commission agent or the consignee immediately before the transfer by him to third person. If the property in the goods or all significant risks and rewards of ownership of goods continue to belong to the principal, the relevant sale price shall not form part of the sales/turnover of the commission agent and/or the consignee as the case may be. If, however, the property in the goods, significant risks and reward of ownership belongs to the commission agent and/or the consignee, as the case may be, the sale price received/receivable by him shall form part of his sales/turnover..........GN on Tax Audit by ICAI.