Can take deduction u/s 35ad

Tax queries 1426 views 3 replies

Nilesh

97 Points Joined January 2009

My one client business of wholesale business in fruits since last 15 years. On 1/5/2011 he has purchases machinery for the purposes of Cold Chain Facility for self business and not any other purposes. His total income is taxable u/s 44AD.

My question is can he take deduction u/s 35AD or not? When he is not taken deduction u/s 35AD in that case what rate depreciation calculated, also when depreciation is calculated @ 100% rate in that case client taken loss then sec. 44AD is not applicable and audit is taken compulsorily ?

Replies (3)

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Joined February 2011

If your client is taking presumptive income u/s 44AD, it is assumed that all expenses including depreciation has been allowed to him. All deductions u/ss 28 to 43C have deemed to be allowed in case of Presumptive Income.

Nilesh

97 Points Joined January 2009

Originally posted by : Prateek Agarwal
	If your client is taking presumptive income u/s 44AD, it is assumed that all expenses including depreciation has been allowed to him. All deductions u/ss 28 to 43C have deemed to be allowed in case of Presumptive Income.

I know this provision. If Sales during the year Rs. 58 lakhs. U/s 44AD net profit 8% of Rs. 58 lakhs is Rs. 4,64,000 & Tax in that case is Rs. 29,252/-. But actual investment in plant & machinery of Cold Chain Facility of Rs. 20 lakhs. In that case what is decision taken?

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Joined February 2011

Nothing. Your calculation is correct. In case of new machinery purchased, it is depreciated @ 15% (Additional 20% in case of mfg. concerns). But depreciation is not calculated separately in case of PTS. In that case, what you can do is offer lower income.

I will let you know the thing in a while.