Query on 44ad

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 July 2011 Dear Experts,
i filed my return for 2011-12 a/y as follows ;
net profit from retail trading activity = 6% ,
cash credits/ adhayam receipts = 2% total works out to 8% (as required by 44AD)
both are shown under business income only. no other income. is this allowed ? or should the 8% be only in turnover and all others extra??
pls clarify.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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29 July 2011 Section 44AD is limited to Business Income only.

1. Cash Credit/ Adhayam Receipts if could be understood as interest receipts, that in no way forms part of the business income. It is separately assessed under the head Income from Other sources.

2. However if the receipts mentioned are purely related with the line of business in which turnover is being shown, it can be treated then only as a business income.

As I am not familiar with the term Adhayam
I presume it "Adham" in business income and advise it to show separately.

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Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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29 July 2011 In case these cash credits / adhayam receipts are business related then these are to be included in the turnover and then the profit has to be calculated on the consolidated turnover.
For example-
Business Turnover - Rs. 25,00,000.00
Other Business Receipts - Rs. 1,00,000.00
Then profit has to be 8% of Rs. 26,00,000.00 i.e. Rs. 2,08,000.00.

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