Please advise on matter

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Kumar Gaurav (Querist)
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14 June 2015 Dear experts

i want full details on below matter pls go through once-

1. Mr. A is running a centre providing pathlogy services under a license from ABC ltd. ABC ltd pays amount after tds deduction.

2. total tds deducted is 80000 rs.

3. Mr. A has no records no books of accounts even a single voucher.

4. now he wants to file ITR and wants to cliam tds refund accordingly.

my queries are-

1. which ITR form should be used? is it ITR 4?

2. whether A is required to maintain books of accounts such as cash book, voucher etc?

3. can he file his ITR on d basis of presumptive income? if yes then pls explain in detail.

4. any other advise on d same?

thanking u in advance.

Kumar Gaurav

Kumar Gaurav (Querist)
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15 June 2015 Please respond.

I shall be thankful to all of you.

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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15 June 2015 Yes he can show his return u/s 44AD i.e under presumptive income scheme in which he has to show minimum 8% net profit out of his gross receipts. Than he is not required to maintain his books of account. But his turnover should not exceed Rs. 1 crore. You may show 8% or more as net profit out of receipts from pathology services.But you cannot declare his income u/s 44AD if he derives commission income from ABC ltd. That is if ABC ltd. has shown commission income (TDS against section 194H) in his form 26AS than that income will be out of purview of section 44AD.

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Kumar Gaurav

Kumar Gaurav (Querist)
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15 June 2015 Dear Expert

Mr. A is getting discount from ABC Ltd after TDS deduction u/s 194J. Total Receipts were for Rs. 8 Lacs.

SO this means he can compute his Profit as follows-

Suppose: he declares 10%*8Lacs ie: 80,000/- Profit and his tax liability would be Nil

Please correct me if i am wrong.

Thanks

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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15 June 2015 If he is getting all the receipt from ABC ltd. only and he does not issue bills on his own account than all the gross receipts i.e. Rs. 8 lacs may be shown as his gross receipts u/s 44AD and a net profit of 8% or more may be shown. TDS of Rs. 80,000/- may be claimed. But I would like to know nature of his business is he also charging from customers? Please clarify in detail.

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Kumar Gaurav

Kumar Gaurav (Querist)
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15 June 2015 Dear Sir

Thanks for your kind help.

Further, Mr. A is running path. centre under Franchisee of ABC Ltd.
Mr. A collects the payments from Customers directly.
ABC Ltd raises the invoices to Mr. A and collects the payments from Mr. A.for his fees.

Example in detail-

Mr. A collects the payment from customer say for Rs. 500/-

Now, ABC will raise invoice to Mr. A as under-

MRP (500) Mr. A discount (200) Net Amount(300)

Now, Mr. A will pay cheque for Rs. 300/- to ABC Ltd and ABC will deduct TDS on 200/- Discount part

I hope you got the query now.

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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15 June 2015 OK thanks for detailed reply. Now I understood that fees collected from customers by Mr A on behalf of ABC and for that amount ABC issues invoices to Mr A. Mr A is sort of getting his professional fee for his franchisee services in the form of discount. Because net amount is paid to ABC. Out of that ABC deduct TDS. So in this case it is clear that Mr A is getting only professional fee, he is not billing in his individual capacity, running a franchise center for which he gets professional fee and TDS is also deducted.
Therefore Mr A can file his return u/s 44AD showing entire receipts reflected in 26AS as his gross receipts and declare net profit of 8% or more. It is also clear that he is not getting any income from ABC as commission so he is eligible for 44AD.

Kumar Gaurav

Kumar Gaurav (Querist)
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15 June 2015 Yes Sir, you got it right.

So this means-

He can show his income u/s 44AD.
If he wants to declare 10%*8 Lacs, then 80,000 profit can be shown and accordingly nil tax will be payable ignoring other incomes.

Am i right Sir?

Thank you so much for your quick response and helping me.

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CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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15 June 2015 Yes absolutely. And your welcome....

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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15 June 2015 But if you are filing return under presumptive income scheme you may have to file either form 4S or form 4 in both these cases you will have to declare gross receipts, net profit, expenses, cash balance, debtors,creditors and stock if any.

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Kumar Gaurav

Kumar Gaurav (Querist)
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15 June 2015 This means he only need to mention expenses and no need to maintain books right?

Any supporting required or not?

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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15 June 2015 Yes no need to maintain books but as I said as per return form details regarding cash balance, debtors, creditors etc are required to be filled up even if no books are maintained.

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Prakash Kochar

Prakash Kochar (Expert)
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25 June 2015 If discount receipt is on account of professional services or is commission income, then income can not be declared under sect. 44AD
Only business income are eligible but not the professional.
Income from commission is excluded as eligible business from sect. 44AD.

Kumar Gaurav

Kumar Gaurav (Querist)
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26 June 2015 @Mr. Praskah- providing pathology services through an centre will fall under the perview of profession or business??

Pls. also note that Mr. A is not an medical professional he only collects the sample from patients.

Pls. answer.