44ad- in case of loss, without audit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2014 In case of loss in business, Loss is Rs.6 lakhs ,sale turnover is Rs .20 lakhs only, but Audit is compulsory as per section 44AD due to loss in business,

client is having other income as pension income Rs.193000 and interest income 40000, tds deducted on int.

client is closing the business and does not want to claim the benefit of loss in next year , still is he liable to get the books of accounts audited ?

kindly advise

Harsha goyal

Harsha goyal (Expert)
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01 May 2014 The client is liable for audit even if he does not want to claim loss in next year.

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Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2014 normally many small business gets closed due to losses , they find it difficult to go for audit and compliance work due to losses in business, is there any option or provision in income tax to avoid audit

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Harsha goyal

Harsha goyal (Expert)
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02 May 2014 No. Audit in IT is turnover or gross receipt driven. So if there is turnover exceeding the limit then audit has to be done.

Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2014 but in this case , turnover does not exceed the limit ,only there is loss, which attracts 44AD.
can i do this way. on turnover of Rs.20 lakhs , i show profit of more than 8% and pay tax and avoid audit , but in profit & loss account, it will continue to show loss, since it is actual loss.

Harsha goyal

Harsha goyal (Expert)
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04 May 2014 profit or loss as per Income tax is different as compared to profit or loss as per accounts. In first case you need to take into consideration various provisions while arriving at the business income. Make sure that the profit which you intend to show in income tax and that as per accounts are different only due to compliance of income tax provisions. If that is the case then you can go for it.