07 December 2013
original profit as per books of accounts maintained is more than 8% of sales.. in this situation shall we declared profit u/s 44ad that is 8% of sales? (Ex : Net profit as per books of account is Rs.5,00,000 ; sales is Rs.15,00,000; The assessee is maintaining books and prepared P&L, Balance sheet for the purpose of Bank Loan and Service tax)please explain in this case the assessee can declare his profit is less than the actual profit at the option of the assessee u/s 44AD???..
07 December 2013
In case the assessee declares lesser profit in the books of accounts and show higher profits for the purpose of Bank Loan, the loan proposal should have been rejected as the same is not supported by the Income Tax Return data. . Bankers rely upon the return of income filed by the borrower more than the books of account. . By showing the income at higher side to the bankers can be deemed by the AO as the assessee's claim of earning higher income and accordingly can be taxed. (Section 44AD(1). It is not necessary that the claim of higher earnings is required to be made in the Return of Income only. . So, it is sdvisable to show the same income for tax purpose as well as for other purposes like bank loan etc.
CAclubindia
