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Tax audit applicability

Krupal Shah (Mr) (90 Points)

23 September 2015

If the business income does'nt exceed the specified limits of Tax audit that is 1 Crore but the house property income is greater than 1 crore will the company be liable to tax audit ?

Please help asap

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10 Replies

Arun Kumar (Auditor & Tax Practitioner) (168 Points)
Replied 23 September 2015

In case where the Assessess regularly engaged himself in constructing Homes and lending it to Tenants. Then the income from such an act is termed as Income from Business. So if such Income exceeds a limit specified u/s 44AB will liable to undergo Tax Audit.

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Krupal Shah (Mr) (90 Points)
Replied 23 September 2015

What if the assesse business is not engaged in constructing and lending to tenants?

Miss Rinkal (Student) (1309 Points)
Replied 24 September 2015

Only if business turnover exceeds 1 crore then only tax audit is to be done. Not in case of income from house property

Where the person is not engaged in constructing homes and letting it to tenants will be assessed as income from house property

Where the person is engaged in constructing homes and letting it tenants will be assessed depending upon the intention of the assessee -

Where the assessee's intention is earning rental income from the property, then it will be assessed as income from house property

But where the assessee's intention is to sell the property but if it is rented out to its workers /employees then it will be assessed as business income.

Here if tenants are workers/ employees then it will be treated as business income else it will be treated as income from house property

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Ruchi (CA) (1410 Points)
Replied 24 September 2015

If the 'house property' income exceeds Rs. 1 crore then there is no need for audit, however if the income is assessed under ' Business' income for various reasons like renting to employees.... etc., then audit has to be done.

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Krupal Shah (Mr) (90 Points)
Replied 24 September 2015

If it is mentioned in the ANCILLARY OBJECTS in the MoA that the company can give premises on rent/lease...and the company has no other income/turnover except from rent income which exceeds Rs 1 Crore. Is there any case law for reference??

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Krupal Shah (Mr) (90 Points)
Replied 24 September 2015

If it is mentioned in the ANCILLARY OBJECTS and not the MAIN OBJECTS in the MoA that the company can give premises on rent/lease...and the company has no other income/turnover except from rent income which exceeds Rs 1 Crore. Is there any case law for reference??

Arun Kumar (Auditor & Tax Practitioner) (168 Points)
Replied 24 September 2015

If the Main Objective is not Lending the Building for Rent, then the Income from Such Source is assessed as Income from House Property. So if the income from Such Source excees the limit 1 Crore also, the need for Tax Audit is not applicable.

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