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 audit applicability for frequent share trading hinges on business classification and turnover computation guidance, affecting compliance burden.
Frequent short-hold share transactions where investment intention cannot be shown are treated as business income, making tax-audit applicability depend on turnover computed in accordance with the ICAI guidance note on tax audit; capital-gains treatment is inappropriate where facts indicate trading, and the ICAI guidance is the practical reference for determining whether turnover triggers audit compliance.