![]() The term ‘turnover’for the purposes of this clause may be interpreted to mean the aggregate amount for which sales are effected or services rendered by an enterprise. The term “turnover” is a commercial term and it should be construed in accordance with the method of accounting regularly employed by the company.Īlthough, Schedule III of the Companies Act, 2013 has replaced the Revised Schedule VI of the Companies Act, 1956 in the year 2014, guidance given herein above with respect to meaning of the term “turnover”is still relevant. In an agency relationship, turnover is the amount of commission earned by the agent and not the aggregate amount for which sales are effected or services are rendered. It may be noted that the “sales effected” would include sale of goods as well as services rendered by the company. Part II of Schedule VI to the Act, however, defines the term “turnover” as the aggregate amount for which sales are effected by the company. ![]() The term, “turnover”, has not been defined by the Order. The Statement on the Companies (Auditors’ Report) Order, 2003 issued by the Institute of Chartered Accountants of India (ICAI) in April 2004, while discussing the term ‘turnover’ in paragraph 23 states `as follows: “Turnover” means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year ” ![]() Section 2(91) of the Companies Act, 2013 defines “Turnover” as follows: “turnover” used in relation to any dealer liable to tax under this Act means the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period and determined in accordance with the provisions of the Act and rules made there under.įurther, section 8A(1) of the said Act provides that in determining turnover, deduction of sales tax should be made from the aggregate of sales price. The Central Sales Tax Act, 1956 defines “Turnover” as follows: The following meaning of the term “sales”, “turnover” or “gross receipts” should also be considered for the applicability of the section: Section 145(1) of the income Tax Act, 1961 provides that income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” should be computed in accordance with either cash or mercantile system of accounting regularly employed by the assesse. However, the term “sales”, “turnover” or “gross receipts” are not defined in the Act, and considering that the words “Sales”, “Turnover” and “Gross receipts” are commercial terms, they should be construed in accordance with the method of accounting regularly employed by the assessee. ![]() The initial test is to see if the total sales, turnover or gross receipts in business or profession during the previous year, as the case may be exceed the prescribed limit under section 44AB. ![]()
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