Filing share of income from firms only for presumptive cases
This query is : Resolved
12 July 2024
A newly joined partner of the firm used to file ITR under 44AD for his proprietary business, which is no longer operating. Now, he has income (remuneration and interest) under BP only from firm. Can he file ITR 3 under share of income from firm only, or he has to file under presumptive basis if he wants to avoid audit.
12 July 2024
SECTION 44AD - NOT ELIGIBLE ON INTEREST/REMUNERATION INCOME OF PARTNER FROM PARTNERSHIP FIRM.
12 July 2024
yes i know sir, but as he previously opted for 44AD to disclose his income under business and profession, i am confused whether he can now disclose income under BP (remuneration and interest only) in itr3 without audit under 44AB.
12 July 2024
Tax audit not required.
See the link.
https://acrobat.adobe.com/id/urn:aaid:sc:AP:5b671b8f-d119-415f-a8f3-eb1e6a5626e3
See the link.
https://acrobat.adobe.com/id/urn:aaid:sc:AP:5b671b8f-d119-415f-a8f3-eb1e6a5626e3
12 July 2024
sir, i read your link. my situation is slightly different. Here partner wants to disclose income under business and profession which comprise of only interest and remuneration. However, previous year he had disclosed income under this head for his proprietary business under 44AD. Now my concern is whether 44AB (e) would apply to him or not. my reading is, it would not, as 44ab(e) says " carrying on business...." and as per this article of yours remuneration can't be termed as business..hence simply the person has not filed under 44ad because he no longer carrying on the business and techincally 44ad (4) is not applicable to him. am i correct?
12 July 2024
Remuneration and interest received from the firm will be considered as business income.
How much interest and remuneration received.
How much interest and remuneration received.
12 July 2024
total rs 350000. however i like to draw your attention to this para from your link:
The ratio of Madras HC in an earlier ruling4 rendered in the context of section 44AD of the ITA (relating to computation of profits and gains of business on presumptive basis) could be applied to the case under consideration. In the said case, the Madras HC had upheld the disallowance made by the Revenue on the following grounds: ─ The taxpayer was an individual and a partner in some partnership firms; ─ The taxpayer while filing his return of income had applied presumptive rate of tax @ 8% (on the income from remuneration and interest received from the partnership firm) under section 44AD of the ITA; ─ Section 44AD of the ITA was available only for an eligible taxpayer engaged in an eligible business (which should have a total turnover or a gross receipt); ─ The taxpayer was not carrying on business, and the remuneration and interest received by the taxpayer from the partnership firm could not be termed as its turnover; and ─ The remuneration and interest received from the partnership firm could not be treated as gross receipt of the taxpayer. In view of the above, the Bombay HC in the case under consideration held that remuneration received by the taxpayer from the partnership firm could not be treated as gross receipts in profession and accordingly, the taxpayer was not required to get the accounts audited under section 44AB of the ITA.
The ratio of Madras HC in an earlier ruling4 rendered in the context of section 44AD of the ITA (relating to computation of profits and gains of business on presumptive basis) could be applied to the case under consideration. In the said case, the Madras HC had upheld the disallowance made by the Revenue on the following grounds: ─ The taxpayer was an individual and a partner in some partnership firms; ─ The taxpayer while filing his return of income had applied presumptive rate of tax @ 8% (on the income from remuneration and interest received from the partnership firm) under section 44AD of the ITA; ─ Section 44AD of the ITA was available only for an eligible taxpayer engaged in an eligible business (which should have a total turnover or a gross receipt); ─ The taxpayer was not carrying on business, and the remuneration and interest received by the taxpayer from the partnership firm could not be termed as its turnover; and ─ The remuneration and interest received from the partnership firm could not be treated as gross receipt of the taxpayer. In view of the above, the Bombay HC in the case under consideration held that remuneration received by the taxpayer from the partnership firm could not be treated as gross receipts in profession and accordingly, the taxpayer was not required to get the accounts audited under section 44AB of the ITA.
13 July 2024
Tax audit not required.
Disclose both interest and remuneration as business income.
Disclose both interest and remuneration as business income.
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