Calculation of profit u/s 44ad

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2014 Dear friends,
My friend is carrying on a business of jewellry. His main activity is to sell gold and silver ornaments and also prepare some new ornaments from gold bars.

While selling they collect making charges from the customer. They also paid making charges while purchasing the ornaments from wholesalers. They do not charge the vat on the making charges.

Now suppose they have sold ornaments worth Rs. 4000000/- during a year and collect Rs. 60000/- as making charges then while calculating profit u/s 44AD @ 8%, whether we have to include making charges of Rs. 60000 in total turnover or not. That is whether we have to show profit

4060000*8% = 324800

or

4000000*8% = 320000 + 60000 = 380000

Please solve the above query..

Thanks