| Question And Answer | |
|---|---|
| Subject: | TAX AUDIT AND F AND O LOSS |
| Category: | Income-Tax |
| Querist: | Prerna bora |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | F&O, Speculation income, Tax Audit |
| Date: | January 22, 2022 |
Facts of the case:
1. Assessee is carrying on business of manufacturing paper bags and ROI is filed u/s 44AD till AY 20-21.
2. For AY 21-22 alongwith manufacturing activity he has also done Futures and Options transactions the summary is as below:
Manufacturing Activity- Turnover Rs. 9.91 lk and Profit Rs. 1.59 lk
F&O – Turnover Rs. 2.24 crore and Loss Rs. 3.12 lk
Assessee has prepared separate P&L for both business and common balance sheet.
Query:
1. Can assessee take the benefit of Proviso to Section 44AB(a) (As nothing in Cash for F&O business- criteria met. For manufacturing business this criteria of cash transaction is not met)-
Show F&O loss under normal business without doing audit and continue the Manufacturing business under section 44AD.
2. Also If assessee need to claim the loss and get it carried forward than Audit will be required? (As time limit to file regular return is ended)
Pl guide
It is pertinent to note that section 44AB of the Income-tax Act, 1961 is qua the assessee and not qua the business. Therefore, the assessee would have to prepare and file a tax audit report, if applicable, without segregating the businesses.
Further, an Audit report is not a criterion for carry forward of losses. However, loss cannot be carried forward unless the return has been filed on or before the due date.