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Applicability of section 44ad of the income tax act, 1961

nandeep (article assistant) (39 Points)

10 January 2016

One of my friend earns fees from providing Martial Arts training. I want to know whether we can opt for Section 44AD in the above case. in Section 44AD, there is a reference to Section 44AA as well, wherein it specifies that profession mentioned under section 44AA (1) cannot opt for Section 44AD. However Karate Coaching / Martial Arts Coaching is not mentioned in Section 44AA. Please share your views on this. Thanks, Nandeep.

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JAINENDRA JAIN (ACS/CA) (1668 Points)
Replied 10 January 2016

The presumptive taxation scheme under these provisions can be opted for by the eligible assessee who is engaged in any business (except the business of plying, hiring or leasing goods carriages referred to in section 44AE), whose turnover or gross receipts from such business do not exceed the limit of audit prescribed under section 44AB. Further, these provisions can be adopted by the assessee only if he has not claimed deduction under section 10A/10AA/10B/10BA or under sections 80HH to 80RRB in the relevant year. Moreover, the provisions of section 44AD cannot be adopted by an assessee who is engaged in any profession as prescribed under section 44AA or is carrying on an agency business or is earning income in the nature of commission or brokerage. The important criteria of the scheme is the turnover or gross receipts from the eligible business. To opt for the scheme the turnover should not exceed Rs. 1,00,00,000.