Vajra Global Consulting Service LLP Vs Assistant Director of Income Tax (Madras High Court)
No requirement of Audit Report in Digital Marketing with a turnover below ₹5 Crores and cash transactions below 5% as it was business and not profession
Conclusion: Anybody carrying on the business of Digital Marketing with cash transactions both on the aspect of receipts and payments in cash below 5% of the turnover, which was below Rs.5 Crores as per the proviso to Section 44 AB (a), the said assessee was not required to file an audit report and they were exempted.
Held: Assessee-company was carrying on the business of Digital Marketing with a turnover of below Rs.5 Crores and they had not received or spent any amount in cash beyond the limit of 5%, in which case the audit report was not required to be filed for the turnover upto Rs.5 Crores and therefore, they had not filed audit report. Assessee received an intimation notice from the department and on the same day, assessee filed reply stating that the cash receipts and payments were less than 5% of the turnover and also the turnover was below Rs.5 Crores and therefore, they had not furnished the audit report. However, the department passed the assessment order. Department submitted that assessee was not carrying on the business of Digital Marketing but carrying on the profession. Since they carry out all the work through the computers, it fell under the category of profession. Therefore, in the event of profession, the limit of Rs.5 Crores would not be applicable. Assessee submitted that the question of carrying on the business of Digital Marketing would not fall under the category of profession and therefore, under the wrong impression, the department proceeded to pass the impugned order as if the assessee did not carry on the business but carried on the profession. It was held that assessee turnover was below Rs.5 Crores and the cash transaction was below 5% on both aspects of expenses and receipts and everything was carried on through bank transactions. In this regard, evidence had also been produced and the said aspects had not been considered by the department. In non application of mind, the department arrived at a conclusion that the present transaction was in the nature o profession, not in the nature of business and passed the impugned order. In view of the above, the bench allowed the petition and set aside the impugned order.
