Image result for corporate and professional updatesDIRECT TAX

  • Income Tax :  Disallowance of artificial loss made on account of fictitious transactions – CIT(A) has deleted the addition merely by observing that the books of accounts of the assessee were audited and have not been rejected by the AO. – Matter restored before the CIT(A)  – ITAT Mumbai  in case of [ACIT 12 (2) (2) , Mumbai Vs. M/S. Highland Industries Ltd.]
  • Income Tax : TDS Credit – Wherever the payer-deductor had made the payment to the company but by error deposited tax in the account of the firm, the petitioner company must get benefit of such tax deducted at source  – Gujarat High Court in case of [Anish Infracon India Pvt. Ltd. Vs. DCIT]
  • Income Tax : Claim of credit of TDS deducted on salary – Employer failed to deposit the TDS amount with the Government – Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years. Credit of such tax would be given to the petitioner for the respective years  – Gujarat High Courtin case of [Devarsh Pravinbhai Patel Vs. ACIT Circle5 (1) (1)]
  • Income Tax: Addition u/s 41 – remission or cessation of liability – when the software library was capitalized, it cannot be said that any benefit or remission or cessation of liability occurred  – Madras High Courtin case of [The CIT Vs. Smt. R. Radhika]
  • Credit of TDS deducted from salary – Revenue directed to give the credit even if employer failed to deposit TDS amount with the Government – Devarsh Pravinbhai Patel Vs ACIT (2018 (9) TMI 1635 – Gujarat High Court).

Calculation of Turnover for Tax Audit  u/s 44 AB of Income Tax Act, 1961: 

  • For Assessee in share trading business to give them clear understanding whether they are liable to get their accounts audited for tax audit u/s 44AB of the Income Tax Audit. So, let’s check what law dictates about it.

Tax Audit Applicability under section 44AB:

  •  An individual who is engaged in business and the annual turnover of his/her business is Rs 1 crore and above.
  • Determination of turnover u/s 44ab of income tax act,1961, in case of trading of shares either on speculation or non speculation basis
  • “As per Section 43(5) of the Income Tax Act, 1961, INTRA-DAY TRADING shall be considered as SPECULATIVE BUSINESS TRANSACTIONS and the income therefrom would be either speculation gains or speculation losses. Income from speculation gains is taxed at the normal rates.”
  • However, Income from trading F&O (both intraday and overnight) on all the exchanges is considered as NON-SPECULATIVE BUSINESS TRANSACTIONS as it has been specifically defined this way.
  • Income from shorter term equity delivery based trades (held for between 1 day to 1 year) are also best to be considered as non-speculative business income if frequency of such trades executed by you is high or if investing/trading in the markets is your main source of income.

Turnover or gross receipts in respect of transactions in shares,securities and derivatives may be determined in the following manner:

  • As per  Para 5 of “Guidance Note on Tax Audit under Section 44AB of the Income Tax Act,1961″ issued by The Institute of Chartered Accountants of India (ICAI):

(a) For Speculative Transactions:

“The Turnover is net of all positive and negative income from various transaction and not total of all Sales transaction.So if your Net Income > 1 Crores rs., you are liable to tax audit.”

(b) Derivatives, Futures And Options (Non- Speculative Transactions)

“The turnover in such types of transactions is to be determined as follows:
(i) The total of favourable and unfavourable differences shall be taken as turnover.(i.e suppose in 1st transaction you have incurred loss of Rs 65 Lacs and after that you entered in profit transaction in which you have earned Rs 36 lacs, Then as per this guidance note you are liable to tax audit because total of  of Profit and Loss a/c exceed Rs 1 Crore)

(ii) Premium received on sale of options is also to be included in turnover.(Call or Put Premium paid/received)

(iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.”


  • MoF issues a circular clarifying applicability of GST on Residential programs or camps meant for advancement of religion, spirituality or yoga by religious and charitable trusts – Circular No. 66/2018, dt.26.09.2018.
  • Marg Sudharan Shulk – charged and collected by applicant for the maintenance of forest road, from non-government, private and commercial vehicles engaged in mining work in lieu of use of forest road – Levy of GST confirmed – AAR, UK in Divisional Forest Officer, Dehradun (2018 (9) TMI 1647).
  • CBEC has issued circular regarding GST on Residential programmers or camps meant for advancement of religion, spirituality or yoga by religious and charitable trusts. Vide circular no 66/40/2018-GST, dated 26th September 2018.
  • GST: Post GST regime, the pending refund claim of CENVAT credit under Central Excise, if sanctioned, will necessarily have to be paid in cash –Toshiba Machine (Chennai) Pvt. Ltd. Vs CCE (2018 (9) TMI 1576 – CESTAT Chennai).

FAQ on GST Audit:

  • Query:What is the legal recourse available in respect of a person who is liable to pay tax but has failed to obtain registration?
  • Answer: Section 63 of CGST/SGST Act provides that in such a case, the proper officer can assess the tax liability and pass an orderto his best judgment for the relevant tax periods. However, such an order must be passed within a period of five years from the due date for furnishing the annual return for the financial year to which non-payment of tax relates.

RBI Update:

  • The Reserve Bank of India has issued notification regarding Voluntary Transition of Primary (Urban) Co-operative Banks (UCBs) into Small Finance Banks (SFBs). Vide notification no RBI/2018-19/52, dated 27th September 2018.


  • ICAI Elections 2018: Nominations for 32 Central Council (CC) Seats and 64 Regional Council (RC) Seatshave been completed y’day. The Region wise list of valid candidates is expected soon.
  • ICAI has launchedA unique and exclusive Job Portal for Chartered Accountants where no. of companies and vacancies increasing every day. Members can find a best job on this portal that matches their interest.


  • GSTR-3B (SEP 2018)-OCT 20th, 2018
  • GSTR-5 (SEP 2018)-OCT 20th, 2018
  • GSTR-6 (JULY 17 – AUG’18)- OCT 30TH, 2018
  • GSTR-4 (JULY-SEP, 2018)-OCT 18th, 2018
  • GSTR-5A (SEP 2018)-OCT 20th, 2018
  • Quarterly return for registered persons with aggregate turnover up to Rs. 1.50 Crores- GSTR-1 (JULY- SEP, 2018)-OCT 31ST, 2018.
  • Quarterly return for registered persons with aggregate turnover more than Rs. 1.50 Crores- GSTR-1-(AUG 2018)-OCT 31ST 2018


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associates , a leading Tax & Investment Planning Advisory Service Provider. His blog can be found at any query you can write to Hope the information will assist you in your Professional endeavors. For query or help, contact: or call at 09811322785/4 9555 5555 480)


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This update has generic information that is given on the basis of "as is" and does not warranty it in any kind, nor does it imply, express or intend to aim a specific situation. The information given here might not be understood and shouldn't be considered as a particular opinion or advice. This write up shouldn't also be replaced for any service or professional advice and it also shouldn't be relied upon or used it acted as grounds for any action or decision that might affect your business or you. It is also distinctly clarified that this update has no intentions to be a form of advertisement or invitation or solicitation to generate any client-advisor relationship.

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