Can tax audit applicable for partnership firm loss

This query is : Resolved

ANKIT GOR (Querist)
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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

Narendra

Narendra (Expert)
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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.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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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.

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ANKIT GOR

ANKIT GOR (Querist)
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13 June 2012 Thanks to all both of you.
Siddhartha Sir Audit is not required that's give me more satisfaction.

THANKS

ANKIT GOR

Rupesh

Rupesh (Expert)
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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.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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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.

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