Can tax audit applicable for partnership firm loss
This query is : Resolved
13 June 2012
Respected Sir\madam,
I am Very thankful to all of you for your kind Support in earlier.
This time My Problem is this I have Partnership Firm Assessee Which make loss this year
As per Rules PROFIT less than 8% of Turnover it it necessary for TAX AUDIT.
But i am confused that The Firm Has Loss
So weather Tax Audit Applicable for that or Not?
Please
Thanks and Regards
ANKIT GOR
I am Very thankful to all of you for your kind Support in earlier.
This time My Problem is this I have Partnership Firm Assessee Which make loss this year
As per Rules PROFIT less than 8% of Turnover it it necessary for TAX AUDIT.
But i am confused that The Firm Has Loss
So weather Tax Audit Applicable for that or Not?
Please
Thanks and Regards
ANKIT GOR
13 June 2012
As per Sec.44AB of the income tax Act,
the applicability for tax audit depends on the turnover of the firm, but not on profit/loss.
FINANCIAL YEAR LIMIT (BUSINESS)
2009-10 40 LAKH
2010-11,2011-12 60 LAKH
2012-13 ONWARDS 100 LAKHS
These amendments will take effect from 1st April, 2013 and will, accordingly, apply to the assessment year 2013-14 and subsequent assessment years.
the applicability for tax audit depends on the turnover of the firm, but not on profit/loss.
FINANCIAL YEAR LIMIT (BUSINESS)
2009-10 40 LAKH
2010-11,2011-12 60 LAKH
2012-13 ONWARDS 100 LAKHS
These amendments will take effect from 1st April, 2013 and will, accordingly, apply to the assessment year 2013-14 and subsequent assessment years.
13 June 2012
First you have to see the turnover/gross receipts of the firm.
Assuming the query is for AY 12-13, if the turnover/gross receipts exceed Rs. 60 lakhs, then audit is compulsory even if there is loss.
If the turnover/gross receipts are less than Rs. 60 lakhs, then audit is required if the assessee shows income less than 8% AND his income EXCEEDS the maximum amount not chargeable to tax.
In case of partnership firm, exemption limit is NIL.
Since there is a loss, the income DOES NOT EXCEED the exemption limit and accordingly audit is NOT required.
Assuming the query is for AY 12-13, if the turnover/gross receipts exceed Rs. 60 lakhs, then audit is compulsory even if there is loss.
If the turnover/gross receipts are less than Rs. 60 lakhs, then audit is required if the assessee shows income less than 8% AND his income EXCEEDS the maximum amount not chargeable to tax.
In case of partnership firm, exemption limit is NIL.
Since there is a loss, the income DOES NOT EXCEED the exemption limit and accordingly audit is NOT required.
13 June 2012
Thanks to all both of you.
Siddhartha Sir Audit is not required that's give me more satisfaction.
THANKS
ANKIT GOR
Siddhartha Sir Audit is not required that's give me more satisfaction.
THANKS
ANKIT GOR
21 October 2012
Dear Sir, I have a doubt regarding Siddartha Sir's Opinion. Act says 8% of the Gross Income will be deemed to be the "Profits & Gains from Business" and whose Total Income (including the deemed income) exceeds Exemption Limit, need to get their books audited.
So when an assessee claims business loss, which is absolutely lesser than 8% of his Turnover, won't he be required to get his books audited ?
I would be much grateful, if you can please clarify.
So when an assessee claims business loss, which is absolutely lesser than 8% of his Turnover, won't he be required to get his books audited ?
I would be much grateful, if you can please clarify.
20 November 2012
Dear Rupesh, please note that Section 44AD provides that where the assessee claims profits less than 8% AND his total income exceeds the exemption limit he is required to get his accounts audited.
BOTH the conditions have to be simultaneously satisfied, viz,
1. The assessee should show income less than 8%, AND
2. His income EXCEEDS the exemption limit.
If there is a loss, then the income DOES NOT EXCEED the exemption limit. It is less than the exemption limit.
Accordingly, audit is NOT required if there is a loss.
BOTH the conditions have to be simultaneously satisfied, viz,
1. The assessee should show income less than 8%, AND
2. His income EXCEEDS the exemption limit.
If there is a loss, then the income DOES NOT EXCEED the exemption limit. It is less than the exemption limit.
Accordingly, audit is NOT required if there is a loss.
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