29 September 2012
Dear Expert, A partnership firm doing business of Builders and Developer has incurred expenses on purchases, labour charges and other indirect expenses on a residential project in 2011-12. The project was under construction and there was no sale agreement done in 2011-12, hence there is no sales turnover. All the cost incurred is in WIP in 2011-12. WIP is Rs.95 lacs. Due to this there is no profit or loss. My question is whether audit is required?
30 September 2012
According to the section 44AD minimum of 8% profit you have to offer for income tax purpose in your case your turnover is nil so 8% profit is ZERO However as per your books also Zero or for the reason of indirect expenses it may be loss as per your books But according to the section 44AD you have to show no income or loss I.e Zero Income. I.e you don't allow to carry forward off loss so if like to loose carry forward benefit of loss then you no need to make tax audit otherwise it required to tax audit.
01 October 2012
The assessee is bound to get the books of accounts audited, if the following two conditions are satisfied:-
1. His profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) i.e. his net profit is lower than 8% of turnover.
and
2 Whose total income exceeds the maximum amount which is not chargeable to income-tax. In case condition No.2 is not satisfied, therefore need not get accounts audited even if showing loss for revenue expenses claimed from this business.
01 October 2012
Yes, Prakash kochar is correct. I am sorry because i forget about the new amendment to the section 44AD at the time of replying to the query. Sorry for my mistake.
CAclubindia
