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44ad read with 44aa

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Dhana Sai

193 Points Posted on 28 July 2023

44AA(2) says if we carry on business or profession, we have to maintain all the books and records which enable A.O to compute *total income*.

44AD(5) says, if 44AD(4) applicable I.e. claiming profits below specified % and if total income exceeds BEL, then books specified under 44AA(2) shall be maintained and audit should be done.

Q.1) sir for example, there is a person who has pgbp and capital gains. And opted 44AD for pgbp and claimed COI for f.y 2001-2002.

Now my doubt is, if A.O asks documents or proofs for such COI in scrutiny. Can we say we are not required to maintain books or any documents which enable A.O to compute total income as per section 44AA(2) r.w 44AD.

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Quick Summary

This discussion clarifies the record-keeping requirements under Sections 44AD and 44AA of the Income Tax Act. While Section 44AD mandates maintaining books of account for business income, the application of this to capital gains is explored. The consensus is that while specific records for business income under 44AD might not be needed if conditions are met, separate documentation for capital gains is still required when requested by the Assessing Officer.