TaxTMI 
TaxTMI 
A person is a salaried professional having taxable salary of Rs.15,00,000/-. He also deals in shares, whereby his Capital gain is Rs.7,00,000/-(S.T.C.G.) & Speculation Profit is 5,00,000/. His cost/Sale Price of total shares purchased/sold during the year exceeds 40,00,000/-( say SP-42 lacs & cost 30 lacs plus cost of shares in stock worth Rs.4 lacs purchased during the year). Is provisions of Section 44AB, Tax Audit applicable? If yes, under which criteria he is covered for Tax Audit? kindly advise.
Applicability of Tax Audit
12 May 2009 
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Tax audit applicability hinges on whether share dealings are business (turnover-based audit) or capital gains, removing the turnover test.
Whether a taxpayer with salaried income and share transactions is subject to a tax audit depends on whether the securities activity is characterised as business (bringing turnover-based audit criteria into play) or as capital gains, in which case the turnover test for audit does not apply; the determination turns on indicia such as frequency, motive, holding period, volume and accounting treatment and must follow administrative guidance and case law. (AI Summary)
Whether a taxpayer with salaried income and share transactions is subject to a tax audit depends on whether the securities activity is characterised as business (bringing turnover-based audit criteria into play) or as capital gains, in which case the turnover test for audit does not apply; the determination turns on indicia such as frequency, motive, holding period, volume and accounting treatment and must follow administrative guidance and case law. (AI Summary)