Re: General Trading Chat
It was there last year too.....
your third point is wrong...if income is less than Rs 2 L even then you require audit if your TO is > 1 Cr OR TO < 1 Cr and profits < 8% of TO...the Section 44AD needing audit is an independent section.
So even if you trade few trades and make profits less than 8 % of TO and even though your total income is less than 2 L you need audit under section 44AD. That is the real issue with this section.
Smart_trade
This post is old but i thought i should share my view on it
With all due respect,
i contradict your view on this topic.
firstly Section 44AD is
" (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business
are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB."
as you can see that Audit requirement statement is framed with "and" & not with "or" that means both the statements are needed to be true for audit to be attracted.
(in case "or" would had been used than any one confirmed statement would had been enough for audit)
let me illustrate with example
1. in case the turnover of FNO is Rs 25,00,000/- the 8% of the same comes to Rs.2,00,000/- now lets say that actual profit lies around Rs. 50000/- & if income from any other source does not cross Rs. 2,00,000/- and hence the total income does not cross Rs. 2,50,000/- (inclusive of FNO actual profit)
in such case 44AD is not attracted and there is no need get accounts audited. the proper itr to file in this case is ITR 4. no need to maintain accounts too.
2. same way if there is say loss of Rs 50,000/- than the total income comes to Rs. 1,50,000/- again audit is not warranted. ITR 4 is to be fillled before 31st July (this year 31st August) loss can be carried forward. no need to maintain accounts too.
same way is loss is Rs. 50,000/- and income from any other source is say Rs. 3,25,000/- than total income comes to Rs. 2,75,000/- in this case audit is needed. ITR 4 is to be filled before 30th September and loss can be carried forward. need to maintain accounts.
lastly if 8% profit is declared than no need for audit file ITR 4S along with proper addition of other income.
note: keeping in mind the set-off of loss is dependent on the relevant provisions of income tax act. For example Salary income cannot be set-off against any loss.
Many would also think if the ITR 4 can be filled without maintained accounts. the answer is yes.
further to add on the topic, there are certainly many ambiguities on this topic and no clarification is issued by the government hence interpretation on the basis of bare reading of act along with proper representation is the key. after all the efforts of any individual are limited to how the authority sees the particular situation in this case INCOME TAX Department.
In My View One of the reason for the same topic to never reach the bench of ITAT, HC, SC is because not one knows the correct application.
Regards
CA. Ritesh Bafna