DEPRICIATION ALLOWABLE OR NOT
This query is : Resolved
06 November 2010
THAT I HAVE SHOWN GROSS RECIEPT ( CIVIL CONTRACT ) OF RS : 2 CRORE AND NET PROFIT AFTER DEPRICIATION AND SALARY & INTT TO PARTNER OR ALL OTHER EXP. IS 10 LAC. NOW MY CASE IS SELCTED FOR SECRUITNY FOR THE A.Y 2009-10. THAT THE DEPRICIATION OF RS : 1.5 LAC , INTEREST TO PARTNER RS : 1.2 LAC AND SALARY TO PARTNER RS : 1.5 LAC.
NOW MY QUESTION IS CAN WE SURRENDER PROFIT @ 8% OF 2 CRORE = 1600000/-
AND CALIM EXP. SALARY TO PARTNER = 1.5 LAC , INTEREST TO PARTNERS = 1.2 LAC AND ALSO DEPRICIATION OF RS = 1.5 LAC.
SHOW ME THE WAY TO MINIMISE MY TAX . CAN ALL THE ABOVE EXP. WE CAN CLAIM ?
NOW MY QUESTION IS CAN WE SURRENDER PROFIT @ 8% OF 2 CRORE = 1600000/-
AND CALIM EXP. SALARY TO PARTNER = 1.5 LAC , INTEREST TO PARTNERS = 1.2 LAC AND ALSO DEPRICIATION OF RS = 1.5 LAC.
SHOW ME THE WAY TO MINIMISE MY TAX . CAN ALL THE ABOVE EXP. WE CAN CLAIM ?
07 November 2010
S 44AD is applicable when Gross Receipts are not exceeding Rs. 40.00 Lac.
In your case Gross Receipts exceeded Rs. 40,00,000/, as such you were required to maintain books of account and further you were required to get them audited.
As such you are not having the option to show profit @ 8% on presumptive basis.
However, Depreciation, Interest on Capital to Partners, Remuneration and other business expenditures would be allowed as per normal provisions of Income Tax Act.
Your audited accounts show lesser profits and you are in a position to justify the book results, then there is no criteria to show a minimum percentage of Gross Receipts as profit. You can claim loss also.
In your case Gross Receipts exceeded Rs. 40,00,000/, as such you were required to maintain books of account and further you were required to get them audited.
As such you are not having the option to show profit @ 8% on presumptive basis.
However, Depreciation, Interest on Capital to Partners, Remuneration and other business expenditures would be allowed as per normal provisions of Income Tax Act.
Your audited accounts show lesser profits and you are in a position to justify the book results, then there is no criteria to show a minimum percentage of Gross Receipts as profit. You can claim loss also.
07 November 2010
Munish
As Mr.Paras Bafna rightly said, When the gross receipts exceeds Rs 40 lakhs, the provisions of Sec 44AB would apply (A.Y.2009-10)Consequently the audit report in Form 3CB or 3CA along with 3CD should have been prepared& filed along with return of Income.
Once the turnover or gross receipts exceeds the limit of Rs.40 lakhs Books of account as mentioned in U/s44AA should be prepared & audit shall be done by Chartered Accountant.
Any expenses can be claimed inthe course of business.
Even the Interest to partner & partners remuneration can also be claimed PROVIDED INTEREST SHALL BE ALLOWED AS PER PARTNERSHIP DEED OR AS PER SEC 40 b WHICH EVER IS LOWER AND PARTNERS SALARY IS RESTRICTED TO SEC 40b OF INCOME TAX ACT 1961.
As Mr.Paras Bafna rightly said, When the gross receipts exceeds Rs 40 lakhs, the provisions of Sec 44AB would apply (A.Y.2009-10)Consequently the audit report in Form 3CB or 3CA along with 3CD should have been prepared& filed along with return of Income.
Once the turnover or gross receipts exceeds the limit of Rs.40 lakhs Books of account as mentioned in U/s44AA should be prepared & audit shall be done by Chartered Accountant.
Any expenses can be claimed inthe course of business.
Even the Interest to partner & partners remuneration can also be claimed PROVIDED INTEREST SHALL BE ALLOWED AS PER PARTNERSHIP DEED OR AS PER SEC 40 b WHICH EVER IS LOWER AND PARTNERS SALARY IS RESTRICTED TO SEC 40b OF INCOME TAX ACT 1961.
07 November 2010
you can't take benifit of section 44AD as your gross receipts are more than Rs.40lcks. You can claim all the expenses in whatever quantity incurred by you there is no restriction in claiming expenses however the salary can be claim as per the prescribed limit.
08 November 2010
I agree in toto with the views of all the three experts who have very clearly spellt out the intention of the Act and the extent you are obliged to comply.
09 November 2010
i agree the views of all the experts.
But, in the view of tax savings, why you have claimed only 1.5 Lakhs as Partner's remuneration. You are having an option to claim5,12,500 u/s 40(b)
Your book profit of11,50,000 (Net Profit 10 Lakh + Remuneration claimed 1,50,000) for AY 2009-10: a non professional firm can claim - on first 75,000 - 90% (67500), on next 75,000 - 60% (45000), on balance - 10,00,000 - 40% (4,00,000)
But, in the view of tax savings, why you have claimed only 1.5 Lakhs as Partner's remuneration. You are having an option to claim5,12,500 u/s 40(b)
Your book profit of11,50,000 (Net Profit 10 Lakh + Remuneration claimed 1,50,000) for AY 2009-10: a non professional firm can claim - on first 75,000 - 90% (67500), on next 75,000 - 60% (45000), on balance - 10,00,000 - 40% (4,00,000)
10 November 2010
I agrred with mr.lakshmi.pn and I have also mentioned earlier that the salary can be claim as per the prescribed limit mr. lakshmi.pn make it more cleaqr by given example.
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