Depriciation adjustment in 44ad

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Chirag Punyani (Querist)
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25 November 2017 I am preparing a balance sheet for my client whose return has been filed u/s 44AD. In 44AD depriciation is deemed to be allowed. So at the time of preparing balance sheet whether i should adjust depriciation with capital A/c or any other head.?

Amitav

Amitav (Expert)
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25 November 2017 44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business 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 chargeable to tax under the head "Profits and gains of business or profession" :

[Provided that this sub-section shall have effect as if for the words "eight per cent", the words "six per cent" had been substituted, in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account during the previous year or before the due date specified in sub-section (1) of section 139 in respect of that previous year.]

(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.

(3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

Amitav

Amitav (Expert)
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25 November 2017 If Section 44AD is applicable then there is no need to prepare regular books of accounts. However for practical purpose we do maintain regualr books . Also if you are liable to maintain the books under any other law or statutory matter, then you need to follow that.

For regualr books, you can adjust depreciation to asset like (Gross Value- Cumulative Depn= Net Value )

But for taxation we offer for tax 8% profit on sale only under 44AD

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KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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26 November 2017 Keep your 8 % or 6% on gross turn over of adjusted profilt after adjusting Depreciation if you prepare profit and loss a/c under 44 AD, if you are preparing only balance sheet adjust Depreciation with capital A/c. Finally Depreciation or Net profit is adjusted to Capital A/c.

RAJA P M

RAJA P M (Expert)
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26 November 2017 You can calculate depreciation for the asset. But, Profit is must above 8/6%. You ll calculate before (including) the profit

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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30 November 2017 If statement of affairs is being prepared you may show asset after deducting depreciation. Only thing is that you are not eligible to claim depreciation u/s 44AD.