Audit of accounts

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  1. jayanthm

    jayanthm New Member

    my wife is trading in equity out of my own funds. My salary income is 8 Lackhs yrly. My wife incurred shortterm loss rs 1lak and 70000 loss in equity futures and commodity futures. Turnover in eqity is 40 Laks and futures is 80000, Interest from bank deposit in her name is 120000,

    Now how much is added to my income.
    Whether the accounts need to be audited. My wife income is below taxable limit. But mine is above the limit and her net income will be clubbed with mine.
     
  2. Karan Batra

    Karan Batra Well-Known Member

    Tax Audit is not applicable in this case
     
  3. ZED

    ZED Well-Known Member

    To Sir's reply I wish to add , in respect of
    Only interest Income ,which is, 120,000 is to be clubbed.

    As per the clubbing provisions [S.64]this income is MANDATORILY to be treated as your income.

    The tax credit should be coming under her income but it actually belongs to you. Ask if bank can revise the TDS return and issue the TDS certificate in your name.

    You should have filed a declaration under rule 37BA of the Income Tax Rules, wherein you declare that the income from FD will be assessable in your hands and hence the TDS certificate be issued in your name and on Your PAN and not in your wife's name and PAN.


    [Generally when FD is opted a declaration is required that income is not assessable in someone else's hand. There must have been a similar provision in your FD also. Check.
    If you would have told this to bank then they would have required you to file declaration under Rule 37BA as cited below for your reference.]

    If bank refuses to revise the TDS return then even her return would be required to be filed and she will have to claim refund of TDS.

    [From next time, give the declaration.]


    Rule 37BA. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.

    (2)[(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee :

    Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).]

    (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.

    (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.

    (3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.

    (ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.

    (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of—

    (i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority; and
    (ii) the information in the return of income in respect of the claim for the credit,
    subject to verification in accordance with the risk management strategy formulated by the Board from time to time.]
     
  4. jayanthm

    jayanthm New Member

    Loss in futures is 70000 and is considered as business loss .Is not this allowed to set off against int income.
    Regarding tax audit though my wife income is below tax limit and her income or loss being clubbed with mine.My income is above exemption limit. Since income frm futures trading is less than 8 %of turnover. does this not require tax audit.
     
  5. ZED

    ZED Well-Known Member

    First we need it to club in your income, set off provisions will come thereafter. When applying the setoff provisions I will not set losses off with income to be clubbed in your hands(interest income) but will see your entire total income. Loss from business can be adjusted with interest income.
    The TDS point also which I discussed earlier will too remain unaltered.
    My original post still the remains same.
    Kindly note that if the loss can not be set off this year then from next year such loss can be set off only against the income u/h PGBP

    That 8% thing is applicable if assessee is claiming/ had claimed in past, the profit on presumption basis as per S.44AD
     
  6. jayanthm

    jayanthm New Member

    But if we show income less than 8% of turnover then audit is to be made if our taxable income is above exemption limit. Is audit necessary in my case. I am salariex having 8 Lack p.a. income and my wifes business loss is tobe clubbed


    एक्षेम्प्तिएक्षेम्ति
     
  7. ZED

    ZED Well-Known Member

    As I mentioned earlier, that would apply ONLY IF profits were deemed to be the profit and gain u/s 44AD (at any time)

    My simple Question to you is whether in the past , the profit were considered u/s 44AD??


    Please read the following extract with special emphasis on coloured and bold text.

    Audit is required in following cases

    Every person,
    (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year; or

    (b) carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or

    (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or

    (d) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,


    (e) carrying on the business shall, if the provisions of sub-section (4) of section 44AD [cited below] are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.


    [APPLICABLE W.E.F FINANCIAL YEAR 01.04.16]

    S.44AD(4) Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1).
     
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