RAJ KUMAR (FINANCE MANAGER) (1393 Points)
20 December 2011HELLO FRIENDS, MY CLIENT HAS SHOWN THE GROSS PROFIT 6% OF SALES BUT IN PROFIT AND LOSS A/C THERE IS A COMMISSION AND OTHER INCOMES AS A RESULT NET PROFIT RAISE TO MORE THAN 8% OF SALES.
NOW PLS. TELL ME WHETHER AUDIT IS COMPULSORY OR NOT.
FOR 8% WE HAVE TO SEE GP OR NET PROFIT.
PLS. HELP ME.
THANKS.
praveen
(Chartered Accountant)
(6971 Points)
Replied 20 December 2011
You have to net profit and not gross profit.
Section 44AD is only for business of civil construction. or supply of labour for such a purpose.
Hence it does not include commission receipts.
You have to remove the commission receipts and the expenses incurred for earning the commission receipts and then verify the percentage of proifts ot sales.
Based on that you can make a decision.
RAJ KUMAR
(FINANCE MANAGER)
(1393 Points)
Replied 20 December 2011
SEC 44AD IS APPLICABLE FOR ALL BUSINESS FOR AY 2011-12.
CA.NAKUL GUPTA
( )
(184 Points)
Replied 20 December 2011
SECTION 44 AD N/A ON commission income but is is applicable on manufacturer, wholesellers,retailers.
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