Query 1] Please answer the following questions:-

  1. My Turnover is Rs. 59 Lacs excluding vat amount for Rs. 6 Lacs and in my trading account sales amount shown for Rs. 59 Lacs and VAT amount for Rs. 6 Lacs shown in duties and taxes A/c (not reflected in trading account). Please answer whether I am liable for audit u/s 44AB or not?

  2. My mother has gifted me Rs. 2 Lacs in individual status and I have gifted this amount to my HUF. Please explain whether Individual can do gift to his own HUF? It is legal or not and what is tax liability? Would it be treated as cross gift? [Amit Rajak, G.D.Complex, Marhatal, Jabalpur 482002-ankurkhare1979@yahoo.co.in]


  1. The tax audit u/s 44AB is compulsory for the FY 2011-12 if the Sales, turnover or Gross receipts from business exceeds Rs. 60 Lacs (Rs. 15 Lacs for assessee engaged in the Profession). The term “Sales, Turnover or Gross Receipts” are not defined under the Income Tax Act-1961. However, as per the Guidance Note on Tax Audit issued by ICAI, where VAT/ excise duty are separately accounted for and not included in the sales A/c, then turnover would not include the value of VAT/Excise duty so separately accounted for. However, if the VAT/Excise Duty are included in the sales A/c itself then no adjustment for the same could be done in the figure of sales to assess the amount of turnover for the purpose of section 44AB. In your specific case, the VAT is accounted by you separately & hence the same would not be includible in the calculation of Turnover. Hence, audit would not be mandatory if the turnover (excluding VAT) is less than Rs. 60 Lacs provided further that Income offered is more than 8% of the turnover amount. If the income to be offered for taxation is less than 8% of the amount of turnover, then the audit would be mandatory by virtue of section 44AD of the Income Tax Act-1961.
  2.  If any member of the HUF transfer his own assets to HUF without consideration (i.e., throw his assets to the common hotchpotch), income from such assets would be taxable in the hands of individual transferring the assets and not in the hands of HUF [Section 64(2)]. So, if the amount is gifted by you to your HUF, the income thereon would be clubbed with your income only.
  3. Our readers may further note that gift received by HUF from any person other than member is taxable if the amount of gift exceeds Rs. 50,000/-.

Query 2]

  1. I am salaried employee and my wife is housewife. She sometimes takes up part time jobs such as teaching, typing work etc. I am having PPF account and my wife opened PPF account recently. I deposit around Rs. 70,000/- in my PPF yearly. I claim section 80C benefit. The second PPF account is for saving purpose and we will not be claiming section 80C benefit. My query, Is the total limit of PPF yearly per family in both accounts taken together is Rupees one Lacs or it can be of Rs. one Lacs in each account?

  2. My second query is regarding Pin Money appeared in The Hitavada Dated 17/10/2011. How the transactions regarding pin money to be shown? Is it simply the amount given to wife and deposited by her in her account or it is to be transferred to her account via cheque or DD? Please clarify. [614@rediffmail.com]


  1. The limit of Rs. 1 Lacs per account is per major Individual member & not for Husband & wife taken together. Wife & Husband, both, can separately avail the limit of Rs. 1 Lacs each u/s 80C by depositing it in the PPF Account.
  2. U/s 64(1) (iv) of the Income Tax Act-1961, any income arising from assets transferred to spouse without adequate consideration is taxable in the hands of the transfer  and not in the hands of transfer. However, if asset is acquire by the spouse out of pin money (i.e., a reasonable allowance given to the wife by her husband for her dress and usual household expenses) then the income from such assets cannot be clubb with the income of her husband.
    [R.B.N.J Naidu Vs CIT (1956) 29 ITR 194 (Nag) and
    R.Dalmia Vs. CIT (1982) 133 ITR 169 (Delhi).] Resultantly, the income arising out of the reasonable fund of Pin Money accumulated & invested need not be clubbed with the income of your husband. The same could be treat as your income.
    The amount need not transfer by depositing the amount in her account via cheque or DD. Even the amount given in cash and save by the wife could be considere for the purpose.
Query 3]
What is Section 80D of IT Act which offers deductions from Gross Income. My mother is aged 77 years & normally stays with me and has no income of her own. Can I deduct any amount from my Gross income as per the above? [Mahesh, Raipur-agmakesh@pnb.co.in]
  1. Section 80D enables an assessee to claim deduction from Gross Total Income the following payment:
    a] Payment of health insurance premium of assessee or his family or his parents
    b] Contribution to the Central Government Health Scheme
    c] Payment for preventive health check up of the assessee or his family or his parents.
    Amount of Deduction:
    Deduction can be claim by an individual in respect of the medical insurance premium pay up to Rs 15,000/- for himself and his spouse and dependent children. Additionally, he can also claim deduction for the medical insurance premium up to Rs 15,000 for his parent(s). The aforesaid deductions shall be Rs 20,000 in case the premium is pay for senior citizen (60 years or more from the FY 2012-13).
    A Precaution:
    I] Ensure to make the payment by cheque only.
    II] There is a max ceiling of Rs. 5,000/- on preventive health check up from the FY 2012-13 within the overall limit mentioned above.
  2. Further, you may examine the availability of deduction u/s 80DD of the Income Tax Act-1961 as under:
    Deduction U/s 80DD
    Deduction under this section is available to an individual/HUF who incurs any expenditure for the medical treatment, training and rehabilitation of a disabled dependent or Deposits any amount in schemes like Life Insurance Corporation for the maintenance of a disabled dependent. A deduction admissible u/s 80DD is of Rs 50,000/- in normal course. Where the dependent is a person with a severe disability, a higher deduction of Rs 1,00,000/- is allow. The term ‘dependent’, as mentioned above, refers to the spouse, children, parents and siblings of the assessee who are dependent on him for maintenance and who themselves haven’t claimed a deduction for the disability in computing their total incomes u/s 80U. The dependent for the purpose of section 80DD has to be a “person with a disability”.




BY CA. NARESH JAKHOTIA (Chartered Accountant)



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