16 January 2016
A person shows that he is coverer under section 44AD having total turnover below 1Crore. He purchases a land for 4 lacs which he shows as stock in trade for his land business in F. Y. 2010-11 and sells it for Rs. 60 Lacs in FY 2012-13. Please clarify whether he il liable to pay tax on profit of Rs. 56 lacs or he show his income at 8% of rs. 60 lacs which is his turnover in this case u/s 44AD.
17 January 2016
In Section 44AD(1)- It has been prescribed that 8% or higher income can be declared by the assessee. Please go through the following excerpt from Section 44AD(1)- "or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee , shall be deemed to be the profits and gains of such business..." . as the case may be- means based on the facts of the case . claimed to have been earned by the eligible assessee - here whose Claim- of the assessee or of the AO ? . It is therefore, advisable to show the real business income as it can be claimed by the department also, on the basis of registered sale deeds, that the assessee has earned higher income.
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