TAX AUDIT

[malhar shenoy]

Is Tax Audit compulsory for person Trading in Shares ?

Shares are bought by  Demat & sold within a week time, So itension  to  hold the assets as investment cannot be established .Whether the same can be treated as Capital Gain ? If yes let me know the supporting case law , also  please  critically analyse the circular issued by CBDT.

As per my view it is Business Income ,  what would be the Turnover for the same , as considering the Share Price as Turnover it will definately be more than Rs 60 Lakhs. Or as per section 44 AD , it will not have a profit more than 8% of the total turnover.

So cost of compliance for Tax Audit  would be more than the Earnings made on the Share Trading.

Please consider any other aspects relating to this issue & reply.

AI Summary

Tax Audits Required for Frequent Share Trading; Classified as Business Income, Turnover Exceeds Rs 60 Lakhs. A participant inquired whether tax audits are mandatory for individuals trading in shares, particularly when shares are bought and sold within a week, questioning if such transactions can be classified as capital gains. They expressed the view that it should be considered business income, with turnover exceeding Rs 60 Lakhs, and noted that compliance costs might outweigh earnings. In response, it was confirmed that these transactions are business in nature, and it was suggested to refer to the ICAI's guidance note on tax audit for turnover calculation.