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TMI BlogSection 44AB of the Income-tax Act, 1961-Applicability in the cases of commission agents, arahtias, etc.-Clarification regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961, as inserted by the Finance Act, 1984, casts an obligation on every person carrying on business to get his accounts audited, if his total sales, turnover or gross receipts, as the case may be, exceed Rs. 40 lakhs in any previous year relevant to the assessment year commencing on 1-4-1985 or any subsequent assessment year. 2. The Board have received representations from various persons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned with reference to its terms and conditions and no hard and fast rule can be laid down as to whether the agent is acting only as an agent or also as a principal. 4. The Board are advised that so far as kachha arahtias are concerned, the turnover does not inculde the sales effected on behalf of the principals and only the gross commission has to be considered for the purpose of section 44AB. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pacca arahtia, on the other hand, makes himself liable upon the contract not only to the third party but also to his constituent; (iii) Though the kachha arahtia does not communicate the name of his constituent to the third party, he does communicate the name of the third party to the constituent. In other words, he is an agent for an unnamed principal. The pucca arahtia, on the other hand, doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with pacca arahtia. 5. The above distinction between a kachha arahtia and pacca arahit may also be relevant for determining the applicability of section 44AB in cases of other type of agents. In the case of agents whose position is similar to that of kachha arahtia, the turnover is only the commission and does not include the sales on behalf of the principals. In the case of agents of the type ..... X X X X Extracts X X X X X X X X Extracts X X X X
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