Section 44 AB states every person whose total sales turnover or gross receipt exceeds Rs 40 lakh is liable for tax audit

available ifthe above the conditions are sat­isfied. If the expenditure incurred by the as­sessee or his dependent or any member of an HUF of the assessee is a senior citizen, then Rs 60000 or actual expenditure, which­ever is lower, is available. Therefore, you can claim deduction under Section 80DDB if the above conditions are satisfied.
The certificate obtained in the prescribed form, i.e. Form No. 10-1, is not to be attached with the return of income. It may be fur­nished when the assessing officer requires it.
I am a tenant in a posh locality since the last 20 years. Now the ownership of my tenanted property has changed. The new landlord has offered me Rs 40 lakh to vacate the fully-furnished 1,50o-sq-ft Oat. Will the Rs 40 lakh I receive be my tax­able income? H yes, will it be taxable under the normal tax rate or will it be taxable under, 'Long-term capital gain'? How can I save on tax? Can I invest in house property to save tax?
- Sadhu Kumar, e-mail Under Section 2(47) of the Income- Tax Act, 1961, the word "transfer" includes relin­quishment of the asset or the extinguish­ment of any rights. A relinquishment takes place when the owner withdraws himself from the property and abandons his rights on it. It presumes that the property contin­ues to exist after the relinquishment.
In your case, the new landlord has of­fered Rs 40 lakh to vacate the fully-furnished flat of 1,500 sq ft. Therefore, the transfer of tenancy rights will be taxable under Section 2(47) as a long-term capital gain. To save on tax you have two options:
Section 54EC: Capital gain not to be charged on investment in certain bonds if the fol­lowing conditions are satisfied:
• The assessee may be an individual, firm, company or any other person.
• The asset transferred is long-term capi­tal asset.
• The assessee has invested whole or any part of the capital gain in long-term speci­fied assets within six months from the date of transfer of asset. Long-term specified as­set means bonds issued by the National Highway Authority ofIndia and Rural Elec­trification Corporation if such bonds are re­deemable after three years and issued on or after I April 2006.
Amount of exemption available under Section 54EC is the least of the following: • The amount of capital gain generated from transfer of capital asset, or
• The amount invested in specified asset as stated.
Investment can be made up to Rs 50 lakh during the financial year.
The cost of specified asset which is con­sidered for the purpose of Section 54EC is not eligible for tax rebate under Section 88 or deduction under Section. 80C.
Section 54F: Capital gain on long-term capi­tal asset other than a house property.
• Exemption available to individual or Hindu undivided family (HUF) only
• The transferred capital asset has to be long­term capital asset other than house property. • To claim exemption under Section 54F, the tax payer will have to purchase a residential house property (old or new) or construct a residential house property. It may be in India or outside India. The new house has to be purchased within one year before, or within two years after, the date of transfer of the original asset. The new house has to be con­structed, i.e., completed, within three years from the date of transfer of original asset.
The exemption under Section 54F will be available if the tax payer has not more than one residential house property. Amount of exemption equals the cost of new house multiplied by capital gains divided by net sale consideration. The amount of exemp­tion cannot exceed the amount of capital gain.
I under take intra-day trading. My sales and purchase volume exceeds Rs 50 lakh. But my profit was Rs 60000 in the fiscal ened March 2009. How do I calculate my turnover for tax and audit? Is there any need for tax audit?
- Pankaj Gael, e-mail Section 44AB of the Income Tax Act, 1961, states that every person whose total sales turnover or gross receipt exceeds Rs 40 lakh is liable for tax audit. Intra-day trading is considered as speculative business and is covered under Section. 43(5) of the Income Tax Act, 1961.
The intention of intra-day trading, is to deal in differences, which is permitted on the stock exchange. Therefore, it is only the amount of difference or profit/loss that is
material in deciding the issue of applicabil­ity under Section. 44AB. If the aggregate of the net position or profit/loss of every trans­action exceeds the limit of Rs 40 lakh as prescribed by Section 44AB, tax audit will be applicable.
Your profit was Rs 60000 in the account­ing year 2008-09. But this information is insufficient to decide whether you are liable for tax audit. This can be explained by way of the following two examples:
• An aggregate profit ofRs 60000 can be derived as profit of Rs 80000 and loss of Rs 20000. In such a case tax audit is not applicable.
• Similarly, aggregate profit of Rs 60000 can be derived as profit of Rs 22 lakh and loss of Rs 21.40 lakh. Here, tax audit is ap­plicable as the turnover exceeds Rs 40 lakh (Rs 22 lakh + Rs 21.40 lakh).
My wife made short-term capital loss (STCL) of approximately Rs one lakh by selling equities (securities transaction tax paid) in the accounting year 2008-09, whereas she made long-term capital gain (LTCG) of Rs 7ססoo from fixed maturity plans (FMP) of mutual funds in the ac­counting year 2008-09. Can Rs 7ססoo be set off and only Rs 3ססoo be carried for­ward as STCL? Can STCL be set off against LTCG on FMP?
- Drishti Khatri, e-mail For FMPs, no securities transaction tax (STT) is paid. Thus, any gain on redemption of these units will be taxed as LTCG and will not be exempt under Section 10(38) of the Income Tax Act, 1961. STCL can be set off against LTCG. Hence, STCL of Rs 100000 can be set off against LTCG of Rs 70000 and the remaining STCL ofRs 30000 can be car­ried forward for eight assessment years.
The replies are only in the nature of guidelines. The tax counsellors and the publication are not responsible for any decision taken by readers on the basis of the same. Readers may address their queries on direct taxation to:
T K Doctor, Clo Capital Market,
101, Swastik Chambers, Sion-Trombay Road, Chembur, Mumbai-400 071
E-mail: tax-matters@capitalmarket.com
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