21 November 2014
If the assessee declares his income lower than the deemed profits u/s. 44AD then he will have to maintain books of accounts and get these accounts audited IF HIS TOTAL INCOME EXCEEDS THE EXEMPTION LIMIT.
In such cases assessee having turnover less than one crore may manipulate his books of accounts and declare his income as low as possible (below 8%) so that his total income works out below exemption limit and thus he can escape the tax audit which I suppose is not the intention of the legislature.
21 November 2014
Not a loophole as such. The rule of interpretation says "benefitial construction'....if the literaligis is not corresponding with the general intent of law. A small timer who is really a small timer does NOT have to get his account audited since his income is really below taxable. On the other hand if a person having a turnover of say 80lakh and saying that my net profit is 2 lakh...so no return, no tax audit....NO this is NOT the intent of law. Under such case, tax audit must be done.
22 November 2014
Always one need read the section concerned, then intention of legislature for passing or including that section can be inferred, that way real basic information on intention of legislature has to be made out . regards
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