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TMI Blog2023 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of calculation of tax for such transaction, the total turnover or gross receipts in the previous year are to be taken into consideration. Section 44AD of the Act prescribes a percentage of such total turnover as gross receipts to be calculated for levying tax. In the common parlance turnover as per Companies Act, 2013 means that aggregate value of the realization amount made from sale, supply or distribution of goods or on account of services rendered or both, by a company during the financial year. This interpretation does not hold good in case of F O transactions where there are neither physical goods involved nor any delivery of shares or securities involved in the said transaction. The entries in the books of accounts of such transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) ('ld.CIT(A) for short), passed u/s.250 of the Income Tax Act, 1961 ('the Act'), confirming the penalty levied by the Assessing Officer (A.O. for short) u/s.271B of the Act, pertaining to the Assessment Year ('A.Y.' for short) 2015-16. 2. The solitary ground of appeal raised by the assessee is that the ld. CIT(A) has erred in confirming the penalty of Rs.1,50,000/-, levied u/s.271B of the Act without considering the guidelines of ICAI in the working of turnover in future and option. 3. Brief facts are that the assessee is engaged in the business of trading, financing, reality and commodity etc. The assessee filed his return of income dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess income' or as 'capital gain' for computing tax. The assessee in this case has treated the same as 'business loss' and not 'STCL', pertaining to the transaction in future and option. The ld. AR relied on ICAI guidelines in calculating the turnover from future and option and as per the said guideline, the assessee's case would not fall under the limit for tax audit and that the levy of penalty u/s.271B was erroneous in the present case. The ld. AR relied on the decision of the Hon'ble Apex Court in the case of CIT vs. Punjab Stainless Industries [2014] 364 ITR 144 (SC) and in case of CIT vs. Pact Securities and Financials Ltd. [2003] 86 ITD 115 (Hyd.), which held that the method of accounting, prescribed by ICAI can be relied upon for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken into consideration. Section 44AD of the Act prescribes a percentage of such total turnover as gross receipts to be calculated for levying tax. In the common parlance turnover as per Companies Act, 2013 means that aggregate value of the realization amount made from sale, supply or distribution of goods or on account of services rendered or both, by a company during the financial year. This interpretation does not hold good in case of F & O transactions where there are neither physical goods involved nor any delivery of shares or securities involved in the said transaction. The entries in the books of accounts of such transactions are not made on the contracted notes issued, but are made only of the differences. For the said purpose, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulating the turnover in case of derivatives has been reiterated by various judicial precedence. Upon consideration of the said method of calculating the turnover in transactions related to future and options, the assessee's case does not fall under the provisions of section 44AB of the Act which mandates auditing of books of accounts and furnishing audited statement of accounts. From the above cited decisions, and also decisions of the co-ordinate bench in case of Sachin Maratrao Rangari (supra) on identical issue, we find no merit in the order of ld. CIT(A) and we hereby delete the penalty levied u/s. 271B of the Act.
13. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 21.11.2022. X X X X Extracts X X X X X X X X Extracts X X X X
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