Sec 44ad for partnership firms

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Neeraj Deshmukh (Querist)
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28 March 2012 Dear Experts,

I want to file a partnership firms return u/s 44ad. As you all know ITR 4S is only for indivdual & huf, hence i can only file the firms return in ITR 5. My problem is that sec 44AD allows firms to claim deduction u/s 40(b) i.e. partners interest and remuneration after calculating profit @ 8%. Then after calculating taxable income as per sec 44AD and allowing deduction u/s 40(b) the taxable income is zero, which is allowed as per act. But there is no option for showing this in the ITR 5. There is only few rows for not maintaining books of accounts under balance sheet and p&l. If i show all the receipts and expenses are equal and the profit is zero, then there are good chances of the department issuing notice u/s 271B for not conducting audit. In such a case what are my options? Please help

Nilang

Nilang (Expert)
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29 March 2012 You can show your t/o and profit in Part A-P&L under no account case without giving effect of Section 40(b) and under Schedule BP in item No.30 you can claim deduction U/S.40(b).Similarly you should show your profit u/s.44AD before effect of Section 40(b) in item 33(i).Which would automatically bring your actual taxable business income if you are using excel utility for ITR.

Thanking you

CA.Nilang A Dalal
09374821453

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Neeraj Deshmukh

Neeraj Deshmukh (Querist)
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29 March 2012 Thank You Dalal Sir, It was really helpful. Going to follow your instructions.

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CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
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11 June 2015 Can we further discuss about this topic, i have one client(Partnership Firm) whose turnover is 91 lac & actual profit is more than 20-25 lacs Before Interest & Remuneration to partner.

We do not want to pay interest & remuneration to partners as there income is already increased & in 30% TAX BRACKET.

So now can we file ITS 5 by declaring 8% of 91 lacs as profit & pay tax on the same ?

& We will show that there is no books of accounts. This is illegal but practical, isnt it ??

Please reply

thanks in advance sir.