puja singhania (CA Final CS (Licenciate)) (61 Points)
20 February 2010An Asssessee carrying on a profession of travel and tours agent, hires the busses from another person. Suppose he charges, 10000/- from his customer and pays 8000/- to the owner of the bus. In such case what will be his turnover for Tax Audit under 44AB. Rs. 10000/- or Rs. 2000/-.?
CA Atul Singhal
(prop)
(450 Points)
Replied 20 February 2010
turnover should be gross amount charged ie Rs.10,000 for the purpose of Sec 44AB.
CA. Ashok shah
(CHARTERED ACCOUNTANT)
(333 Points)
Replied 20 February 2010
You have to consider Gross Receipt as turnover i.e. Rs.10000/- for sec.44AB.
Amol Gopal Kabra (CA,CS,DISA)
(Practicing CA)
(8539 Points)
Replied 20 February 2010
first of all, the tours and travels is not a profession, but its a business. But as you have not mentioned about the actual turnover of the company, the company shall be liable for tax audit if the gross receipts exceed Rs. 40 lakhs and in this case the amount of Rs. 10000 shall be considered for calculating the turnover.
Amir
(Learner)
(4016 Points)
Replied 20 February 2010
Max Payne
(employed)
(2569 Points)
Replied 20 February 2010
Sorry, I have incorrectly understood the question as that of travel agent.
My apologies, I stand corrected...
Pls ignore highlighted portions
Agree with Amol sir....
On the basis of gross receipts itself, there will be tax audit...
But only commission is treated as the turnover...
To identify , what is 'turnover', just see what the interest of the person is, in the transactions he carries out...... whether it is restricted to the income he generates from the agency activity.
Applicability to commission agents - If the commission agent does not sell the goods of his principal as his own and only charges commission for bringing two persons to holy marriage of sale and purchase, then he will not come within the ambit of section 44AB, except when his professional receipts exceed Rs. 10 lakhs - Abhay Kumar & Co. v. Union of India [1987] 164 ITR 148 (Raj.).
You can get a good idea of tests in determining "what is the turnover?" by seeing circular 452 of 1986.... where the person who acts only as an agent of a principal, will be treating commission as his turnover, but a person who also sells goods belonging to other than a principal, the sales will be his turnover.
Amol Gopal Kabra (CA,CS,DISA)
(Practicing CA)
(8539 Points)
Replied 20 February 2010
But this is not a case of commission agent as is apparent from the example. In this case, the assessee is a tours and travel agent but he is not accepting receipts as commission. He is taking buses on hire from the bus owners and then further he is hiring them to their customers. He is doing it on his own initiative. He is not bringing the customers and bus owners together. In such cases, the travel agent also gives the invoices for his services in his own name. So, the turnover shall be in his name only. And the aggregate of receipts received from the customers shall be considered for 44AB.
C.Balaji
(Learner)
(1867 Points)
Replied 20 February 2010
I think there is no commission involved in this case..... Assessee takes buses on hire from bus owners and operates... for hiring he pays the amount.....there is no agent relationship as far as i am concerned...
i think 10000 will be considered as his T.O.
Divya K S
(CA)
(289 Points)
Replied 20 February 2010
The total turnover in this case will be Rs. 10000 for Tax Audit purpose.
Aditya Khaitan
(Manager Accounts & Tax)
(40 Points)
Replied 21 February 2010
Dear Turnover is based on REVENUE u get from customer....
Hence Rs 10,000/- is your turnover for Sec 44AB purpose.
Rs 2000/- can be treated as the Gross Profit from rendering Services..
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