Comment on Taxation Simplified

KRS commented on 05 Jun 2013, 11:34 AM

Dear Nithin,
Thank you for writing a very informative artcile on taxation for stock market transactions. Perhaps, it would be very useful if you could share you views on audit requirement for F & O transactions especially when there’s loss to be filed in ITR 4 under business income.
I’ve received the exact same notice as mentioned by raj195 above, and I know multiple people have received the same notice from CPC, Bengaluru.
According to section 44 AB, audit is mandatory when turnover/receipts exceed the limit of 100 lakhs. However, when there are F&O losses to be filed in ITR under business income, there are some people who say that audit becomes mandatory under section 44AD even though the turnover is less than the prescribed limit as it meets the criteria of section 44AD which states that audit is mandatory if at least 8% of turnover is not shown as profit. Their argument is since it’s a loss declared, it will definitely be less than 8% of turnover and hence it meets audit criteria under secrion 44AD.
Please share your views on this thought as it would help many people get their confusion clarified.

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