44ADA and 44AD lock period!

This query is : Resolved

Guest

Guest (Querist)

02 August 2023 Is it right there is any lock period of 5 years for 44ADA opting assessees? Anytime an accountant can opt in and opt out this option? I have been opting 44AD for my clients who were traders since 2010-11 AY or earlier in continuous succession till 2021-22 AY. For 22-23 AY i had opted out due to a misunderstanding (all of their annual sales being below 50 lakhs -though opted 44AD there will be any taxable income ). I have reentered 44AD for 2023-24 AY for them. If filed with accounts the taxable income will be far below that which has been declared under section 44AD. Is it right to do so? But CBDT mentions 2017-18 AY as the base year for 44AD. Experts please help.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 August 2023 No lockin period for 44ADA.
You have opted for 44AD for five years from the base year.
Opting out in AY 22-23 and optingin in AY 23-24 no problem.

Guest

Guest (Querist)

02 August 2023 Thanks for this expedited response, sir 🙏

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 August 2023 You are welcome...
....

Guest

Guest (Querist)

02 August 2023 Sir, the block period is five years. But the 44AD filing period is 6 consecutive years. In my client case he has more than six consecutive years if years before 2017-18 AY is counted. My doubt is this -if the base year of start of 44 AD is 2017-18 AY or years prior to that? As per the governing section 4 it is just 6 consecutive years. But CBDT's stand in 2016 Finance Act is 2017-18 AY as the base year. Here section 4 and CBDT stand contravenes. I am in a dilemma whether to revise the filed 44 AD 2023-24 AY returns. Please advice.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 August 2023 It's only 5 years. No need to revise the ITR.

Guest

Guest (Querist)

02 August 2023 Thanks sir for the final word on this 🙏