Loss from firm

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Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2011 if loss from partnership firm arising after salary and interest ( before salary and interst profit is more than 8%) in this case are firm is liable to audit? turnover 10 lacs.

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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27 July 2011 No. In that case you can take the benefit of Sec 44AD. As salary and interest to partners are given u/s 40b. While 44AD talks about exemption from section 30 to 38.

So if before giving salary and interest to partners, your Income is more than 8% then you can file your return u/s 44AD. And no need to get accounts audited.

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Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2011 in case of individual if loss from business arising then?

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CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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27 July 2011 It is a tricky situation in case of individual.

Though the law clearly states that you have no need to get your accounts audited if you are having turnover below 60 lakhs and income below taxable limit(160000).
But it is not understandable as it means that if you have income of 165000 then you have to get it audited(if below 8%) but if your income is 155000, then no need of audit. (even if it is below 8%)

But 1 thing is sure that you cannot use 44AD in this situation as 44AD can be only used if you show your income as minimum of 8% of your turnover.

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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27 July 2011 And one more thing, in case of an individual firm, you cannot give interest and salary to the proprietor.

Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2011 thx Ashwani sir...