Applicability of sec.44ad

Page no : 2

Devendra (Chartered Accountant) (4775 Points)
Replied 15 August 2011

Sec. 44AD is not applicable to the Pvt. Ltd. Companies. A Pvt. Ltd has to compulsorily conduct a statutory audit irrespective of its turnover. But once the Turnover exceeds Rs. 60 Lacs, then it shall also be lable for Tax Audit.

Regards,

Devendra

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silvi ubal gomes (Awaiting Final Result) (82 Points)
Replied 19 August 2011

It is not applicable to corporate assessee. And if it wants to declare profit less than 8% it can since it is liable to statutory audit it need not file tax audit.

CA YOGESH GARG GMG PLYWOODS (BUSINESS OF PLYWOOD and PARTNER IN GUPTA & MALHOTRA CHARTERED ACCOUNTANTS) (248 Points)
Replied 20 August 2011

44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.

Explanation.—For the purposes of this section,—

(a) “eligible assessee” means,—

(i) an individual, Hindu undivided family or a partnership firm, who is a resident, but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009) ^27a ; and

(ii) who has not claimed deduction under any of the sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C. - Deductions in respect of certain incomes” in the relevant assessment year;

According to the above definition of eligible assessee a pvt. ltd. company is not covered u/s 44 AD, hence the benefit of the same will not be available to them. This benefit is even restricted to Limited Liability Partnership.