Fire your tax related queries and i would get it solved!!!

[Smart_trade]

Hi I have a query.Could any CA help me on this. thanks in advance
If we withdraw 2lakh from 5 lakh invested in a business, should we consider this 2lk as income in the personal Income sheet or we should not? or we just have to increase the cash in hand by 2lk in the personal balancesheet ?
fyi, share of profit and remuneration from business are added as income in personal income sheet
fyi
business filing ITR is done separately and personal filing ITR is done separately
This 2lk is shown as withdrawal in business balance sheet

The withdrawal of Rs 2 Las not an income unless it is shown as share of income from business..If the person has invested in capital in business, it will be treated as capital withdrawn.You should always do such withdrawals by cheque or DD or NEFT.It cannot be treated as cash in hand in personal account unless it is required for meeting some expenses in cash which is not allowed above Rs 20,000=00

The above is as per my understanding of accounts.

Smart_trade

 

[timepass]

For rented property, if a tenant vacates his premises, and receives a refund of the deposit, how is it treated for taxation for the tenant ? Suppose the amount is 3 lakhs.

 

[john302928]

The withdrawal of Rs 2 Las not an income unless it is shown as share of income from business..If the person has invested in capital in business, it will be treated as capital withdrawn.You should always do such withdrawals by cheque or DD or NEFT.It cannot be treated as cash in hand in personal account unless it is required for meeting some expenses in cash which is not allowed above Rs 20,000=00

The above is as per my understanding of accounts.

Smart_trade

Why cant we just add it to cash in hand in personal account? because we invested in capital. over the years, the interest income, share of profit,remuneration got added to the business capital. we have shown this interest income, share of profit,remuneration every year as part of personal income and paid income tax as per IT slab. Now we had withdrawn about 2lk from the capital and that 2lk capital is shown as drawings and reduced from business balance sheet. Since we have already shown the income from business in all these years in personal account, why cant we just add this 2lk to cash in hand in personal account? Please correct me if I am wrong. If we show this 2lk as income then dont you think we are showing the same income twice ?

 

[Smart_trade]

I never said that Rs 2 L is an income.My post starts with a sentence that it is not an income, Cash in hand in my limited knowledge is meant for doing petty cash expenses like newspaper bill,electricity bill ,office cleaning charges etc...but I am not sure what view IT will take if we show Rs 2 L as cash in hand and carry it forward, Some practising CA will be able to answer you better.

ST

 

[Smart_trade]

For rented property, if a tenant vacates his premises, and receives a refund of the deposit, how is it treated for taxation for the tenant ? Suppose the amount is 3 lakhs.

It is treated as refund of deposit.In the earlier return it must be appearing as Deposit paid...now it gets adjusted with this refund of deposit and becomes zero in the balance sheet.It is not an income .

ST

 

[john302928]

I never said that Rs 2 L is an income.My post starts with a sentence that it is not an income, Cash in hand in my limited knowledge is meant for doing petty cash expenses like newspaper bill,electricity bill ,office cleaning charges etc...but I am not sure what view IT will take if we show Rs 2 L as cash in hand and carry it forward, Some practising CA will be able to answer you better.

ST

I think you misunderstood the context. whatever expenses you are talking about is about the business. I am talking about the cash withdrawal from the capital of the business and adding that cash to personal account. In that personal account whether it is an Income or we should simply add it as cash in hand of personal account not business account.anway thanks

 

[traderhardrock]

Are you running a business, if yes, who is maintaining/writing those account books
Are you maintaining your personal account books, if yes, then who is maintaining/writing those accounts

BTW, what is your logic, behind treating those 200K withdrawl, as income.

 

[john302928]

I am not saying if that 200k should be treated as income. I am trying to understand if that should not be treated as income in the individuals personal account.I am in an opinion that once cash withdrawn from business balancesheet, it just adds with cash in hand of personal account. so I am just trying to get the confirmation if my understanding is correct or not
Business account is taken care by an auditor. Yes we maintain personal account

 

[Happy_Singh]

I am not saying if that 200k should be treated as income. I am trying to understand if that should not be treated as income in the individuals personal account.I am in an opinion that once cash withdrawn from business balancesheet, it just adds with cash in hand of personal account. so I am just trying to get the confirmation if my understanding is correct or not
Business account is taken care by an auditor. Yes we maintain personal account

I guess what ST has indicated above is
You should show an entry (by way of NEFT/any other digital /or cheque transfer,) from business bank account to personal bank account for the 2L.

Then how you use it from your personal account should not be an issues.
(for e.g. can withdraw the cash to keep it with you)

If the transfer has to be shown in cash, then i guess you can do so in multiple transactions.


.

 

[FastestFinger]

Where exactly to show F&O turnover turnover in ITR 3 (AY 2019-2020)?

Does it go in "Other operating revenues"?

In one video on YT, the final profit (before other expenses) is shown in "Other operating revenues" and turnover is just mentioned in brackets.

Is that the correct way?

Can a full time trader include day trading profit in business income?