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Query on sec 44ad

rajesh (Accountant) (583 Points)

26 October 2013

Dear Sir

I Was doing a Contract Work and My Status is Individual

My Whole Year Gross Receipts for the FY-2012-13 is 5,55,000 and now I want file My IT Return and Shown a Profit @ 30% i.e. 1,66,500 on Gross Receipts and I don't Have any Other Income

My Query is to File My IT Return in ITR-4S is possible and if any Books Maintained as per Sec 44AA and furnish any Audit Report U/s 44AB, Because of I am not paid any tax on my total Income.

Please Explain

Thanks in advance

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2 Replies

CA Pallav Singhania (IT System Auditor) (33262 Points)
Replied 26 October 2013

Audit under section 44AD,

Applicable: Any business except plying, hiring or leasing goods carriages referred in S. 44AE and whose turnover is less than Rs. 100 lakhs during the previous year.

Applicable to class of taxpayer: Any resident individual, HUF, partnership firm excluding LLPs and has not claimed deductions u/ss 10A, 10AA,10B, 10BA, 80HH to 80RRB in the relevant assessment year.

Presumptive or estimated income: Sum equal to 8% of the total turnover or gross receipt of the assessee.

Higher or lower income: Assessee at his option can claim such higher/lower amount earned by him. Assessee can also claim to have earned income lower than specified amount, subject to fulfilment of conditions as to maintenance of books of account etc.

Maintenance of books of account: Unlike provision contained in Ss. 44AD(4) (as stood prior to its replacement) & 44AE(4), no specific provision exempting from maintenance of books of account and other documents as prescribed u/s 44AA, when income is offered on presumptive basis. However in case assessee claims that he has earned income lower than specified percentage and such income is more than maximum amount not chargeable to tax, Ss. 44AD(5) and 44AA(2)(iv), mandates him to maintain books of accounts and other documents as specified u/s 44AA, get them audited from the accountant and furnish report as required u/s 44AB.

Deduction from presumptive income: No deduction is allowable under provisions of sections 30 to 38. However in case of partnership firm remuneration to partner and interest on partner’s capital is allowable. For the computation of allowable partner’s remuneration, book profits would be deemed income less interest on capital. Further written down value of any depreciable asset of such business shall be calculated as if depreciation has been actually allowed.

Advance tax: Assessee offering income on presumptive basis provisions of Chapter XVII-C pertaining to Advance tax is not applicable to such assessee. Hence such assessee is not required to pay advance. However S. 44AE(4) may give rise to various peculiar unintended issues.

regards,

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