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Application of sec 44AB of income tax act

Richa Arora CA Final (article) (70 Points)

03 February 2010

Can anybody tell me how sec 44AB applies in case of Companies?& if i am not wrong then the company will not come in the professional category?

Please help

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5 Replies

Amir (Learner) (4016 Points)
Replied 03 February 2010

Dear Richa,

Company can come under "Professional Categories" if it is providing professional services like "Consulting, advising, etc", one of the Big 4 is also a private limited.

Further Sec 44AB says that if an assessee is required to get his accounts audited under any other law then it would be suuficient if Report under this section is furnished.....

Companies are required to get their accounts audited as per company law itself..

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Richa Arora CA Final (article) (70 Points)
Replied 03 February 2010

I am still not clear..Actualy audit as per companies act is compulsary for all the companies but i am not clear with sec44AB (tax audit) for companies.If u can then please explain it in detail...

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 03 February 2010

Section 44AB states that Where a person is carrying on profession and his gross receipts in the profession exceeds Rs. 10 lakh in any previous year. So the question here is whether a company can be said to be carrying out any profession. I think no because a company cannot on its own do something. So i dont think it would be liable for audit u/s 44AB if professional receipts exceed Rs. 10 lakhs.

Amir (Learner) (4016 Points)
Replied 03 February 2010

Dear Richa,

Sec 44 AB is applicable on Companies only if their Turnover exceeds Rs. 40 Lakhs in case of Business & Rs. 10 Lakhs in case of Profession..

Now, Ur earlier doubt was that company cannot be classified under "Professional catregory", which I think is now clear that a Company can also be categorised under Professional category..

Now regarding ur second doubt sec 44 AB says that if a person is required to get his account audited under any other law, then it would besuufficient compliance of sec44 Ab if a report this section is furnished, i:e NO need to get another audit for sec 44 AB.

Prasanth Nair V (ACA,ACS,CWA Final,Mcom) (557 Points)
Replied 11 March 2010

Yes, It can come under professional categories Even the limit of 10 lakhs will apply to Companies, engaged in rendering Professional services such as BPO servises, Consultancies etc.. Did u get it now...