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Query related 44ad

rupesh gupta (tax advocate) (103 Points)

16 October 2011

can anybody told me income from beauty parlour covered u/s44AD because it coverd service sector in income tax codes 0702.i have to file it return then which form ITR4 OR ITR4S ?

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12 Replies

Rahul Gupta (Chartered Accountant) (644 Points)
Replied 16 October 2011

You can file the return of income u/s 44AD only if you are running the business of beauty parlour in the capacity of Individual, HUF and Partnership Firm. In case you are running the same under LLP than you can't file the return u/s 44AD. However in order to file u/s 44AD your total turnover or gross receipts must be less than Rs. 60 Lac Per Annum.

Thus if the above two conditions are not satisfied than you have to file the return in ITR-4. Moreover if conditions are satisfied even than you have a choice to file return in ITR-4 or ITR-4S as per your wish depending upon the situations that whether you are maintaining the books of accounts or not. and if you would like to disclose the details of accounts than go for ITR-4. As Sec 44AE is not applicable if u are filing the return in ITR-4S and your gross receipts are less than 60 lac but 44AE is applicable on lower limits if you are filing in ITR-4

If you are going for ITR-4S than you must declare a income of atleast 8% of the total gross receipts otherwise you are liable to audit books of accounts and a report of audit u/s 44AB is also required.

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rupesh gupta (tax advocate) (103 Points)
Replied 16 October 2011

thanx for answer in very deeply.this is very useful for others.plz tell me 1 more thing that, my turnover 3,83000/- my n.p.is 1,76,180/-(46%).i maintain books but i want to fine ITR4S using u/s 44AD.because this section useful if my case caught in scrutny.can if i file ITR4s ?

Vikas (CA) (1135 Points)
Replied 16 October 2011

Mr. Rupesh, As already told, it is only applicable to a business and not profession...., hence in your case 44AD is not applicable.... You will have to file ITR 4 and not ITR4S..... As far as your profit is concerned, you can claim more expenses which might have been skipped in accounting.

Rahul Gupta (Chartered Accountant) (644 Points)
Replied 16 October 2011

Vikas Vishwakarma is correct

You must file ITR-4 as you are running a profession not a business. I forget to consider this point while giving advise to your issue.

Rahul Gupta (Chartered Accountant) (644 Points)
Replied 16 October 2011

Sec 44AD serves on the basis of presumptive business only

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rupesh gupta (tax advocate) (103 Points)
Replied 17 October 2011

Thanks rahul & vikas but what is basic difference between profession & business.beauty parlour is covered under service sector code 0702 as per incometax return form.then what is your answer ?

Rahul Gupta (Chartered Accountant) (644 Points)
Replied 17 October 2011

@ Rupesh

I will tell you the basic and clear cut difference between the Business & Profession

Business: It includes the trading of Goods & Services i.e. Sale & Purchase

Profession: Any act which requires knowledge & Skill of some individual i.e. without which the act can't performed.

In your concern, there is no Sale & Purchase but it's a application of knowledge & Skill of beauty.

Hope now you can easily differentiate the concerns between these two

Income Tax Code like 0702 are the classification made according to the requirements of the Department. These classification will not made any difference among Business or Profession. However you have to select your appropriate code which is relevant to your Business or Profession while filing up the return.

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Vikas (CA) (1135 Points)
Replied 19 October 2011

good answer rahul...

MANISH (Student) (82 Points)
Replied 20 February 2012

ok means beauty parlour is a profession right ? as rahul says it s application of knowledge but pls tell me if we file return of it u/s 44ad with code 0702 then what will happen after submission of return

MANISH (Student) (82 Points)
Replied 20 February 2012

vikas sir apne pehle bhi bahut help ki he for it thanks

actuly some times in mind lots of questions are arise and we know its solution but till we feel that we have to take the advantage of expert for it so sorry if some time i ask questions like ideot .