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Section 44ad

CA Khyati Pithadia (Chartered Accountant) (173 Points)

02 February 2016

There is partnership firm showing its income u/s 44ad

Turnover - 1515344

Profit 8% - 121228

Interest to partner - 113592

Remuneration to partner - 9757

Net profit - Nil

Whether it is possible u/s 44ad to have nil income ?

Can it be considered as defective return ??

Thanks in advance.

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12 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 02 February 2016

u/s 44AD one has to offer 8% income for tax purpose. or get their accounts audited in case of lower income

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CA Shree Jain (Chartered Accountant) (1572 Points)
Replied 02 February 2016

In case of 44AD not possiable for NIL Income and If you go forcely than its a Defective Return and You received Income Tax Notice also for the same.

Jaspal Singh (Practising CA) (449 Points)
Replied 02 February 2016

Partnership firm, can claim further deduction of remuneration and interest paid to its partners within the limit specified under section 40(b).

I believe you can very well file ROI u/s 44AD

Shivani Mittal (Practice) (425 Points)
Replied 02 February 2016

ITR can be filed u/s 44AD with nil income provided interest & remuneration paid to partners is as per sec 40 as mentioned by Mr. Singh.

Regards

CA Shivani Mittal

Chetan Sharma (Student CA Final ) (21 Points)
Replied 02 February 2016

Yes it considered as defective return. Return can be file as you can take income 8% of gross turnover and then claim deduction of interest u/s 40(b) after this you find book profit and then you can claim remuneration as dedution according to aforesaid section. Through this process you can be file the return.

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CMA Poornima Madhava (CMA) (13112 Points)
Replied 02 February 2016

I agree with Jaspal & Shivani.

Harish Ravichandran (3 Points)
Replied 02 February 2016

Proviso to sec. 44AD(2) states that if it is a partnership firm salary and interest can be deducted as per limits specified in Sec. 40(b)..

CA PRAVEEN PACHALAG (CA ) (208 Points)
Replied 03 February 2016

U/s 44AD Net profits should be 8% before providing remuneration and interest on capital, once your profits are 8% of your sales then you are free to provide interest and remuneration upto 150000

satish kumar Chauhan (accountant) (347 Points)
Replied 03 February 2016

agreed with Mr parveen

preetham kumar mandal (Proprietor) (23 Points)
Replied 03 February 2016

You can file roi with nil income after claiming deduction of interest and remuneration, which not be considered as defective return, make sure income is nil and not negative o after above deduction otherwise will a defective return