Question ID :
40684
BUSINESS INCOME
X AN INDIVIDUAL CARRY ON A TRADING BUSINESS. DURING F Y 2017-18 THE RETURN WAS FILED WITH TURNOVER EXCEEDING 1 CR WITH AUDITED U/S44AB, BUT DURING FY 2018-19 THERE IS NO BUSINESS ACTIVITY . GST FOR FY 18-19 SHOW NIL OUTPUT. BUT PREVIOUS YEAR FY 17-18 BALANCE IN ACCOUNT RECEIVABLE, CREDITOR, BANK ETC IS COMING IN FY 18-19. AND FURTHER IN MONTH MARCH 19 HE PURCHASED A CONSINGMENT WHICH WAS SOLD IN APRIL 19 . BUT TCS HAS BEEN DEDUCTED IN FY 18-19 FOR THE PURCHASES MADE IN MARCH 19.
NOW HE WANTS TO FILE ITR UNDER OTHER INCOME HEAD . CAN HE DO SO. AND DOES HE REQUIRE TO SHOW BUSINESS HEAD, BALANCE SHEET IN ITR -3. DO IN ANY CASE WE NEED TO AUDIT THE NIL BUISNESS . PLEASE ADVICE
Posted by
pradeep kumar agrawal
on
Jun 13, 2020
Filed Under
DIRECT TAXES
In FY 2018-2019, X did have business activity which might be even a single purchase and that need to be reported in the Income tax return if treated as business activity. Due to this there would be a change in the inventory value also which would impact the balance sheet and creditors.
Applicability of tax audit, in case if the turnover is less than 1 crore and if the assesse is opting presumptive method he is not required to get audited his accounts. But since in this case, he is not having any turnover, 8% or 6% of this will also be zero. But the total income (due to other income) might or might not be greater than basic exemption limit. If the total income of the person is more than basic exemption limit, then he might required Audit u/s 44AB other wise not.
Also, looking at this case, 2018-2019, the person should have loss from business and profession as other than sale purchase transaction, he/she would have business expenses, which need to be carried forward or adjusted against any other head of income. Hence it is better to file ITR form 3.
Posted by
CA Yogesh Kumar on
Jun 14, 2020