Turnover in respect of speculation business is only net difference of independent transactions
In a recent judgment, ITAT has held that turnover in respect of derivative trading is to be reckoned as only which may be positive or negative difference for independent transactions.
ABCAUS Case Law Citation:
ABCAUS 3847 (2024) (01) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) of National Faceless Appeal Centre (NFAC), in confirming the income tax penalty under section 271B of the Income Tax Act, 1961 (the Act) imposed by the Assessing Officer (AO) alleging that assessee had not filed tax audit report in terms of provisions of section 44AB of the Act despite the total value of transactions made in derivative segment exceeded the limit prescribed for audit of the books of account under section 44AB of the Act.
The assessee was an individual and inter alia engaged in derivative segment of stock market and was also engaged in trading transaction in stock market.
The assessee contended that the Revenue authority had wrongly adopted sale value as turnover for the purposes of section 44AB of the Act whereas as per para 5 of the Guidance Note of Tax Audit under section 44AB of the Act issued by ICAI, turnover in respect of speculation business is to be reckoned as only which may be positive or negative difference for independent transactions.
It was submitted that following the said guidance note, the difference of positive and negative, the turnover works out to be less than the threshold of turnover prescribed u/s 44AB of the Act, whereas the Assessing Officer had wrongly considered turnover to be total sale proceed of transaction done at a whopping figure of more than six crores and consequently, imposed penalty under misconception of facts.
The Tribunal observed that the issue was squarely covered in favour of the assessee by the decision of Co-ordinate Bench.
The Tribunal opined that in accord with the guidance note issued by ICAI, the turnover of the assessee for the purposes of section 44AB stands lower than the threshold limit prescribed for audit purposes, consequently, the reasonable cause exists for non-compliance of provision of section 44AB of the Act.
Accordingly, the Tribunal cancelled the penalty imposed under section 271B of the Act.
Income of section 25 company by deploying ex-servicemen as security guards was not business activity. In a recent judgment, Kerala…
In absence of a valid final assessment order passed within statutory time frame, draft assessment order cannot give rise to…
No disallowance u/s 43B can be made if expenditure has not been not claimed by the assessee in Profit and…
Whether an assessee developing an infrastructure facility of Government is a contractor and ineligible for claim of deduction under Section…
Jurisdictional Principal Commissioner of Income-tax or Commissioner of Income-tax to condone delay in filing Form No. 10A for Registration u/s…
AO was not justified in making addition by adopting method of extrapolation without bringing any material evidence in support -…