Related to section 44ad( merged with section 44af)
This query is : Resolved
17 April 2012
Dear All,
I need clarification on following matters:-
Suppose Mr. A,is doing retail business and his sales is Rs. 36,00,000 as per section 44AD 8% = 288000 but actually his net income after deducting expenses is Rs. 220000.
My question is that :-
1)If Mr. A, declare his income of Rs. 220000 audit is required ?
2) Suppose if Mr. A, declare Rs. 288000 can Mr. A eligible for deduction under section 80C, 80D and 80DDB
I need clarification on following matters:-
Suppose Mr. A,is doing retail business and his sales is Rs. 36,00,000 as per section 44AD 8% = 288000 but actually his net income after deducting expenses is Rs. 220000.
My question is that :-
1)If Mr. A, declare his income of Rs. 220000 audit is required ?
2) Suppose if Mr. A, declare Rs. 288000 can Mr. A eligible for deduction under section 80C, 80D and 80DDB
18 April 2012
Dear Kanhaiyalal,
If the assessee wants to declare lower income than the deemed profits as calculated above, he will have to maintain the books of account as per s. 44AA and get the accounts audited as per s. 44AB irrespective of turnover if his total income exceeds basic exemption limit.
in your case for point No. 1 Audit will be applicable
for point No. 2
Section 44AD is for calculation of business Income and not for calculation of total Income
hence
all deductions u/ss. 80CCC to 80U shall be allowed
If the assessee wants to declare lower income than the deemed profits as calculated above, he will have to maintain the books of account as per s. 44AA and get the accounts audited as per s. 44AB irrespective of turnover if his total income exceeds basic exemption limit.
in your case for point No. 1 Audit will be applicable
for point No. 2
Section 44AD is for calculation of business Income and not for calculation of total Income
hence
all deductions u/ss. 80CCC to 80U shall be allowed
18 April 2012
agree
1. yes you are right audit applicable
2. sec. 44AD for 8% deemed profit is only on sales/receipts not for net taxable income. 8% is gross income and then calculate deduction after deduction you will have to calculate tax as per slab
1. yes you are right audit applicable
2. sec. 44AD for 8% deemed profit is only on sales/receipts not for net taxable income. 8% is gross income and then calculate deduction after deduction you will have to calculate tax as per slab
19 April 2012
I agree with the experts and they are correct in saying that the Tax audit is required if you show profit less than 8% of gross sales
19 April 2012
But sir this is not a correct as per my point of view
As we know what is the cost of Audit and other related cost
As we know what is the cost of Audit and other related cost
20 April 2012
That you have to fix with your auditor and other related persons. Once you appoint a C.A he will be able to tell you the other cost
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