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presumptive income u/s 44ad

purva.mirji (-) (112 Points)

16 September 2009

Can anybody tell me that in case of presumptive income declared under 44AD, whether we can deduct unabsorbed depreciation bought forward. In the income tax law, it has been mentioned that in case of presumptive income, it must be deemed that all deductions u/s 30 to 38 have already been allowed and hence no further depreciation (u/s 32)must be provided.Hence how should unabsorbed depreciation (u/s 32(2)) be treated?

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12 Replies

CA Mohit Agrawal (Chartered Accountant) (371 Points)
Replied 16 September 2009

unabsorbed depriciation cannot be deducted as minimum 8% income is to be declared and it is deemed that all deductions has already been given effect, if you have to claim unabsorbed depreciation than you have to maintain books of accounts , and can show income less than 8%

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CA Sandeep Thakur (Managment Trainee) (188 Points)
Replied 16 September 2009

i think mohit is totally correct as the presumptive taxation does not allow further dedction of any other amount under section 32 to 38 ...

and hence the unabsorbed depreciation is not allowed as dection for accounting point of view

also if the company falls under the mat then the unabsorbed tax loss and dep cn be claimed

VARUN (PCC STUDENT) (523 Points)
Replied 17 September 2009

yes u can't set off unabsorbed depreciation but if u have any brought forward loss of business then u can set off that business loss with this years business income .....

aurangzaib khan (financial consultant) (95 Points)
Replied 17 September 2009

totally aggee with these answer.

purva.mirji (-) (112 Points)
Replied 18 September 2009

Thank u all very much....

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CA Chand Akhtar (CA) (35 Points)
Replied 11 January 2010

My assessee is a Partnership firm engaged in the buisiness civil contractor and want to declare his income u/s 44AD. My querry is that whether partner salary is allowable and if allowable then on what amount it is to be deducted. Will anybody help me explaining through compuation of income.

Amir (Learner) (4016 Points)
Replied 11 January 2010

Dear Chand Akhtar,

Partner's Salary will be allowed as deduction even in case of presumptve taxation u/s 44AD.

Step 1 - Calculate 8% of turnover

Step 2 - Step 1 MINUS Interest not exceeding 12% per annum, if any on Loan to partners...

Step 3 - Apply this slab on the amount calculated in Step 2

(a) on the first Rs. 3,00,000 of the book-profit or in case of a loss	Rs. 1,50,000 or at the rate of 90 per cent of the book-profit, whichever is more;
(b) on the balance of the book-profit	at the rate of 60 per cent :

Step 4 - Resultant Figure in Step 3 is the amount of salary which will be allowed as deduction to firm...(Remember the same will be taxable in the hands of partners..