44ad
This query is : Resolved
05 June 2014
It is given in sec 44ad that even though the profits are below 8% the books of accounts need not be audited of the INCOME is below taxable income..i just wanted a clarity on whether the INCOME mentioned above is the business income or the total income of the assessee..
05 June 2014
Dear Ravi,
Section 44AD is for Eligible Assessee Having ELIGIBLE business.
so it is applicable to only business income.
further, if you are eligible assessee and having eligible business and your net profit from business income is less than 8% of your GROSS REVENUE or RECEIPT then you can go for this option where you can directly opt for 8% as your net profit which is of GROSS RECEIPT or REVENUE.
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My Answer is only based on Business Income.
However other expert may be right for their own opinion. Here, what i have explained is just and just for Business income and not assuming that asseessee has not any other income.
Use Thank button to Convey your appreciation.
Section 44AD is for Eligible Assessee Having ELIGIBLE business.
so it is applicable to only business income.
further, if you are eligible assessee and having eligible business and your net profit from business income is less than 8% of your GROSS REVENUE or RECEIPT then you can go for this option where you can directly opt for 8% as your net profit which is of GROSS RECEIPT or REVENUE.
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My Answer is only based on Business Income.
However other expert may be right for their own opinion. Here, what i have explained is just and just for Business income and not assuming that asseessee has not any other income.
Use Thank button to Convey your appreciation.
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05 June 2014
gotta disagree with Jatin.
the section itself is self explanatory:
Section 44AD(5) doesn't refer to business income but total income:
"whose total income exceeds the maximum amount which is not chargeable to income-tax,....."
total income on the other hand is defined in section 2(45) means the total amount of income referred to in section 5, computed in the manner laid down in this Act ;
So if your total income exceeds exempted limit, and your business profits are less than 8%, then audit is required.
the section itself is self explanatory:
Section 44AD(5) doesn't refer to business income but total income:
"whose total income exceeds the maximum amount which is not chargeable to income-tax,....."
total income on the other hand is defined in section 2(45) means the total amount of income referred to in section 5, computed in the manner laid down in this Act ;
So if your total income exceeds exempted limit, and your business profits are less than 8%, then audit is required.
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06 June 2014
If profit is less than 8% but total income is taxable, then audit is compulsary.
07 June 2014
what if there is a loss in business and there is no other source of income..is the assessee required to get his books of accounts audited?
07 June 2014
Yes to claim the business loss the assessee has to get his books of accounts audited.
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07 June 2014
but my total income does not exceed the maximum limit not chargeable to tax in that case. then why do i need to get my books of accounts audited. Please provide a relevant provision for the same. Thank you
07 June 2014
ravi. Honestly, the language of the section gives you an impression that audit is necessary only where there is total income more than exempted limit but profit is less than 8%. I would prefer to go with this line of thought and advice that audit should not be required.
Still, I would not rule out other experts' advice that audit may be required.
Still, I would not rule out other experts' advice that audit may be required.
07 June 2014
Expert Sir Nikhil Kaushik is there any such case study which would support your suggestion?
07 June 2014
I depend on the language of section 44AD(5). the section is recent one. Not many cases would have reached the ITAT level.
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07 June 2014
ok thank you so much for your replies. Please inform in case you find anything supporting the same.
07 June 2014
sure Ravi...take care and best of luck
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