Section 44 ad
This query is : Resolved
08 November 2013
THE DETAILS OF THE INCOME OF AN INDIVIDUAL ARE AS UNDER:-
1. INCOME FROM SALARY IS Rs.96000.
2. INCOME FROM OTHER SOURCES IS Rs. 31000.
3. THE TURNOVER OF BUSINESS IS Rs. 17 LAKH AND THE PROFIT IS Rs.72800 i.e THE PROFIT IS 4.28% OF TURNOVER.
HE HAD MAINTAIN BOOKS OF ACCOUNTS
I THINK IN THE EVENT WHEN THE PROFIT IS BELOW THE TAXABLE INCOME AND THE TURNOVER IS ALSO BELOW Rs. 1 CRORE,THERE IS NO NEED TO GET BOOKS OF ACCOUNTS AUDITED AND IN THE ABOVE CASE HE CAN SUMBIT HIS INCOME TAX RETURN WITH SHOWING THE BUSINESS PROFIT OF Rs. 72800 WITHOUT AUDIT REPORT. EVEN THOUGH THE BUSINESS INCOME IS BEING BELOW 8% UNDER SECTION 44AD.
PLEASE TELL ME AM I RIGHT OR NOT?
1. INCOME FROM SALARY IS Rs.96000.
2. INCOME FROM OTHER SOURCES IS Rs. 31000.
3. THE TURNOVER OF BUSINESS IS Rs. 17 LAKH AND THE PROFIT IS Rs.72800 i.e THE PROFIT IS 4.28% OF TURNOVER.
HE HAD MAINTAIN BOOKS OF ACCOUNTS
I THINK IN THE EVENT WHEN THE PROFIT IS BELOW THE TAXABLE INCOME AND THE TURNOVER IS ALSO BELOW Rs. 1 CRORE,THERE IS NO NEED TO GET BOOKS OF ACCOUNTS AUDITED AND IN THE ABOVE CASE HE CAN SUMBIT HIS INCOME TAX RETURN WITH SHOWING THE BUSINESS PROFIT OF Rs. 72800 WITHOUT AUDIT REPORT. EVEN THOUGH THE BUSINESS INCOME IS BEING BELOW 8% UNDER SECTION 44AD.
PLEASE TELL ME AM I RIGHT OR NOT?
08 November 2013
Audit under section 44AD is applicable if the profit of the business is below 8% of the Turnover, irrespective of the volume.
The assessee in question has taxable income and hence has to file his ITR. In the circumstances he has to compute his profit under the head'Profits and Gains of Business or Profession'. The computation of business income also includes Section 44AD. Therefore, it is essential that the concerned assessee gets his accounts audited under section 44AD, irrespective of whether the profit is taxable or not.
The assessee in question has taxable income and hence has to file his ITR. In the circumstances he has to compute his profit under the head'Profits and Gains of Business or Profession'. The computation of business income also includes Section 44AD. Therefore, it is essential that the concerned assessee gets his accounts audited under section 44AD, irrespective of whether the profit is taxable or not.
09 November 2013
ACCORDING TO AN EXPERTS OF THIS CLUB:-
1.sanket gujar:-Wrong. You have to show at least 8% profit or get tax audit done.
2.AKSHAY JAIN:- You are absolutely correct, Audit is not required if your total income does not exceed the maximum amount not chargeable to tax. You can view a similar query with detailed explanation of the above solution: http://www.ngoandtaxconsultant.in/2013/11/audit-if-total-income-is-less-than.html Hope this will help you.
3.ALPESH KUMAR:-the taxpayer will have to get his books of account audited if his total income exceeds the exemption limit. In your case limit is not crossed hence, not liable to audit the account in view of the basic limit is rs. 2 lac.
PLEASE TELL ME WHICH ONE OF THEM IS CORRECT.
1.sanket gujar:-Wrong. You have to show at least 8% profit or get tax audit done.
2.AKSHAY JAIN:- You are absolutely correct, Audit is not required if your total income does not exceed the maximum amount not chargeable to tax. You can view a similar query with detailed explanation of the above solution: http://www.ngoandtaxconsultant.in/2013/11/audit-if-total-income-is-less-than.html Hope this will help you.
3.ALPESH KUMAR:-the taxpayer will have to get his books of account audited if his total income exceeds the exemption limit. In your case limit is not crossed hence, not liable to audit the account in view of the basic limit is rs. 2 lac.
PLEASE TELL ME WHICH ONE OF THEM IS CORRECT.
10 November 2013
Interpretation of statutes have to be done according to the rules laid down by the various courts. If you read section 44AD the section reads "any assessee having income from specified business.......".
Only matters to be considered are is your assessee required to file an Income Tax Return under section 139. The requirement is any assessee whose income before giving effect to the provisions of Section 10A.... and Chapter VIA exceeds the minimum income exempt from tax is required to file his Return of Income.
The moment a person becomes an assessee he has to give effect to the provisions of Income Tax Act 1961. Section 44AD relates to computation of profits from specified businesses. Therefore, if any assessee has got income from specified business, he has to follow the provisions of section 44AD.
Mr.Sanket Gujar has given the same point of view as me, but it appears he has also not taken into account the total income.
Mr. Akshay Jain and Mr. Alpesh Kumar state "Audit is not required if your total income does not exceed the maximum amount chargeable to tax".
In my original opinion I had stated "The assessee in question has taxable income and hence has to file his ITR." The opinion always has to be read in full and not just the conclusion.
I had not given consideration to the fact that your total income is marginally lower than the exemption limit of Rs. 2 lakhs. Since in your case, you are income is below taxable limit, you are not required to file ITR, and hence, section 44AD will not apply in this instant case.
All of us experts have given the same opinion.
Only matters to be considered are is your assessee required to file an Income Tax Return under section 139. The requirement is any assessee whose income before giving effect to the provisions of Section 10A.... and Chapter VIA exceeds the minimum income exempt from tax is required to file his Return of Income.
The moment a person becomes an assessee he has to give effect to the provisions of Income Tax Act 1961. Section 44AD relates to computation of profits from specified businesses. Therefore, if any assessee has got income from specified business, he has to follow the provisions of section 44AD.
Mr.Sanket Gujar has given the same point of view as me, but it appears he has also not taken into account the total income.
Mr. Akshay Jain and Mr. Alpesh Kumar state "Audit is not required if your total income does not exceed the maximum amount chargeable to tax".
In my original opinion I had stated "The assessee in question has taxable income and hence has to file his ITR." The opinion always has to be read in full and not just the conclusion.
I had not given consideration to the fact that your total income is marginally lower than the exemption limit of Rs. 2 lakhs. Since in your case, you are income is below taxable limit, you are not required to file ITR, and hence, section 44AD will not apply in this instant case.
All of us experts have given the same opinion.
12 November 2013
IN THE ABOVE CASE, IF IN THE EVENT, WHEN HIS INCOME FROM OTHER SOURCES IS Rs.38000 IN PLACE OF Rs.31000 AND HE HAD DEPOSITED Rs.8000 IN PPF ACCOUNT.
THEN WHEATHER HE IS LIABLE TO GET HIS ACCOUNTS AUDITED UNDER SECTION 44AD?
BECAUSE IN THE NEW CIRCUMSTANCES HIS TOTAL INCOME EXCEEDS EXEMPTION LIMIT, BEFORE GIVING EFFECT TO THE PROVISION OF SECTION 10A AND CHAPTER VIA.
EVEN THOUGH HIS TOTAL INCOME DOESN'T EXCEED THE MAXIMUM AMOUNT CHARGABLE TO TAX AFTER DEDUCTION UNDER SECTION 80C.
THEN WHEATHER HE IS LIABLE TO GET HIS ACCOUNTS AUDITED UNDER SECTION 44AD?
BECAUSE IN THE NEW CIRCUMSTANCES HIS TOTAL INCOME EXCEEDS EXEMPTION LIMIT, BEFORE GIVING EFFECT TO THE PROVISION OF SECTION 10A AND CHAPTER VIA.
EVEN THOUGH HIS TOTAL INCOME DOESN'T EXCEED THE MAXIMUM AMOUNT CHARGABLE TO TAX AFTER DEDUCTION UNDER SECTION 80C.
14 November 2013
Yes - because he is a tax payer liable to file ITR u/s 139(1). In that case he has to follow all the provisions of I.T.Act 1961, including section 44AD.
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