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44AD applicablility of audit ?

12 September 2017

if an partnership firm whose turnover is 90 lakhs and having net profit after remuneration and interest is 3 lakhs liable for audit for AY 2017 18 ??

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8 Replies

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 12 September 2017

Net profit before interest and remuneration is considered for the purpose of 44AD

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Sanny Vora (16 Points)
Replied 13 September 2017

if net profit before remuneration and interest is 3 lakhs then ?

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 13 September 2017

Actually this is something which I wanted to discuss. In my opinion it doesn't apply still. Because subsection 4 of 44AD

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 13 September 2017

doesn't apply in this case.

Sanny Vora (16 Points)
Replied 13 September 2017

o ya same view but all practicing firm are doing audit in this situation so ...

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Luvish Jain (Tax Consultant) (507 Points)
Replied 13 September 2017

new amendment has proposed to omit the proviso to section 44AD(2) and accordingly, in case of eligible assessee being a firm, the salary and interest paid to its partners shall not be allowed to be deducted from the income computed under sub-section (1) of section 44AD.

hence turnover of 90lacs attracts minimum 8% or 6% profit i.e. 720000 (8%in case) and thus tax ll be on this 7.2 lacs or else if u r showing less than 8% or 6% then audit is compulsory to be done.

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 13 September 2017

@ sanny vora. I don't know why audit is conducted.

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 21 November 2017

Hi Sanny. Do you still have this opinion now. Actually I forgot why I made this opinion. I called IT department and they also confirmed our opinion. But I cannot remember my interpretation why we were discussing 2 months ago and feels like audit is applicable in this case.