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Audit applicability in this case (expert opinion required)

CA AMAN KAMALIA (CA) (88 Points)

15 July 2013

A FIRM HAVING SALES LESS THAN 1 CRORE AND HAVING LOSS IN ITS BOOKS OF ACCOUNTS, WHETHER THE FIRM IS REQUIRED TO GET HIS ACCOUNTS AUDITED OR NOT .....BECAUSE AS PER SECTION 44AD AUDIT IS REQUIRED ONLY WHEN THE TOTAL INCOME EXCEEDS THE MAXIMUM AMOUNT NOT CHARGEABLE TO INCOME TAX AND IN CASE OF FIRM THE MAXIMUM AMOUNT NOT CHARGEABLE TO INCOME TAX IS 0

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(Guest)

From the reading of the section it looks like, in case of a person covered under section 44AD, if such person claims that the profits from the business is lower than the profits computed under this section (8%) and his income exceeds the maximum exemption limit, he has to maintain book u/s 44AA and also get them Audited u/s 44AB.

So, if before partner's remuneration and interest onm capital, there is a loss/nil income, there is no requirement od audit.