TAX AUDIT APPLICABILITY FOR SECTION - 44AD

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Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2011 IF PERSON IS CARRYING TWO BUSINESSES FALLS UNDER SEC-44AD(PRESUMPTIVE TAXATION),WHETHER TURNOVER OF BOTH THE BUSINESSES WILL BE MERGED FOR ARRIVING AN AMOUNT OF 60 LACS????
(SPECIALLY FOR PRESUMPTIVE INCOMES)

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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17 July 2011 Limits given in Section 44AB is person wise and not business wise. So if total turnover of all the business is over 60 lakh than you have to get the accounts of all the business audited.

Querist : Anonymous

Querist : Anonymous (Querist)

17 July 2011 DEAR MAM ,
LIMITS GIVEN IN 44AB IS NOT PERSON WISE , IT IS BUSINESS WISE.....
I AM ASKING SPECIALLY FOR PRESUMPTIVE INCOMES......

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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17 July 2011 1. 44AB is Person wise because the section starts with the words"every person".
2. 44AD contains the words 'eligible assesee". Eligible assessee is defined in eplanation (a) of the said section which includes "individual's".
3. Conclusion is, if an individul having two "eligible business" and the combained turnover is more than Rs.60 lacs per annum,tax audit applies and 44AD is ruled out.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2011 THERE IS DECISION OF KARNATAKA HIGH COURT IN ASSTT. CIT V. DR. K SATISH SHETTY THAT LIMIT TO BE APPLIED BUSINESS WISE NOT PERSON WISE..
THE KARNATAKA HIGH COURT HELD THAT THE CONJOINT READING OF THE PROVISIONS OF SECTION 44AB AND SECTION- 2(13){DEFINITION OF BUSINESS}:-
"DOES NOT SHOW ANYWHERE THAT IN CASE ASSESSEE IS CARRYING ON MANY BUSINESSES , THEN THE AGGREGATE OF BUSINESS HAS TO BE ARRIVED AT AND THEREAFTER, THE SAME IS REQUIRED TO BE AUDITED"
FURTHER OBSERVED THAT "....SECTION-44AB DOES NOT SHOW OR CONTEMPLATE THAT ALL BUSINESSES ARE REQUIRED TO BE CONSOLIDATED FOR WORKING OUT THE AGGREGATE OF TURNOVER"

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 July 2011 Thanks for the citation. However, I still hold my words since the section is very clear. In support of the above observation ,I request u to see Page 9 of ICAI publication 'Issues on Tax Audit'(June,2000 edition).

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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18 July 2011 If the entire turnover of all proprietorship concerns added to-gether is above 60 L then it is covered u/s 44AB otherwise it is covered by 44AD.

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2011 a lot thanks sir for removing my doubt.

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