CONFUSION REGARDING WHICH SECTION TO BE CHOOSEN IN TAX AUDIT REPORT FOR THE F.Y. 2021-22 in CLAUSE 8

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SHRUTI AGARWAL (Querist)
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11 September 2022 Dear Sir/Mam,

CASE I – Relating to Income Tax
A assessee commenced a trading business in the F.Y. 2018-19.The assessee for the 1st P.Y. 2018-19 opted for section 44AD(1) now as per section 44AD(4) he is required to opt for the section 44AD(1) for the next 5 P.Y. i.e. from P.Y. 2019-20 to P.Y. 2023-24 failing which in any of the P.Y. 2019-20 to P.Y. 2023-24 he will be required to get his books of accounts audited for the next 5 P.Y. subsequent to the P.Y. in which he first time opts out from the section 44AD(1).
The assessee again opts for section 44AD(1) for the P.Y. 2019-20.
However in the P.Y. 2020-21 his turnover was 82,17,031/- and decided to declare profit less than 8% i.e. in contradiction of section 44AD(1) thus section 44AD(4) and (5) got activated and the assessee got his books of accounts audited u/s 44AB(e) for the P.Y. 2020-21 and by virtue of section 44AD(4) and if his total income exceeds the maximum amount which is not chargeable to income tax as per sec 44AD(5) now he is required to get his accounts audited for the next 5 P.Y. i.e. from the P.Y. 2021-22 to P.Y. 2025-26.
Question 1 - In P.Y. 2021-22 the turnover of the assessee is Rs. 1,11,89,019 and his total income exceeds the maximum amount which is not chargeable to income tax. So in the Tax Audit Form 3CD under Clause 8 which section is to be chosen as a section which triggers audit of the books of accounts of the assessee for the P.Y. 2021-22 –
Option A - Section 44AB(a) - As the turnover of the assessee for the P.Y. 2021-22 exceeds the tax audit limit of Rs. 1 Crore.
OR
Option B - Section 44AB(e) - As in the P.Y. 2020-21 the assesse opts out from section 44AD(1) which created the liability upon the assesse to get his books of accounts audited for the next 5 P.Y. from P.Y. 2021-22 to P.Y. 2025-26

Question 2 – For the P.Y. 2022-23 it is estimated that the turnover will be less than 1 crore but the total income of the assesse will be more than the maximum amount which is not chargeable to tax. Whether for the P.Y. 2022-23 the assessee will be required to get his books of accounts audited? If, yes than which section should be selected in the clause 8 of the Tax Audit Form 3CD for the P.Y. 2022-23?

CASE-II – Relating to GST
Question 1 – Whether under GST RCM is applicable for renting of commercial property for Commercial use where the service provider is not registered under GST and the service recipient is registered entity under GST for the F.Y. 2021-22?

Regards,
Shruti Agarwal

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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11 September 2022 Case I Ans. 1 & 2. In both the years he has to file audit report u/s. 44AB(e) of the act..
Case II. No. RCM under GST act is not applicable over rent of commercial property used for commercial purpose.

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