Applicability of 44ab

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Vivek Agarwal (Querist)
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09 June 2014 A land is held as stock in trade in the name of two individuals. In the FY 2013-2014, both the individuals entered into a memorandum of understanding among themselves and constructed some flats which earned them a revenue of Rs 1.75 crores in FY 2013-2014. The assessee believes that out of the total revenue, the share of each is Rs 87.5 lacs each and hence their accounts is not subject to tax audit u/s 44AB if they resort to Section 44AF and show their net income over and above 8% of their indivudal shares.

Also please suggest that if in the current year 2014-2015, the gross revenue is Rs 2.5 crores, then will it be subject to two separate audits u/s 44AB

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Guest (Expert)

09 June 2014 they had constructed and worked on which firm name

audit is conducted of the business entity which has been doing that construction business not of the individuals who are partners in that

Vivek Agarwal

Vivek Agarwal (Querist)
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09 June 2014 Thanks Ankit jee for the reply

The construction was not done in any firm name. It was just that the land was held in joint names and while transferring property through sale registration, both the joint owners transferred the property(flats) jointly.

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CA VISHNU GAVKARE

CA VISHNU GAVKARE (Expert)
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10 June 2014 If it was done jointly then it will be taken as partnership. Joint owners can be in a property but here act was beyond merely holding a property. Activity carried by them was jointly and with d motive to earn profit. Hence it is advisable to undertake the audit.