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Section 44ad(5) of income tax act

Sharad Saini (Student) (286 Points)

02 October 2011

hiiiii friends....

My query is related to Sec 44AD(5) of the Income Tax Act,1961

Sec states that if assesse claims that profits from business are lower than presumptive income AND TOTAL INCOME EXCEEDS MAX AMT NOT CHARGEBLE TO TAX then he has to maintain books and get them audited.

What is the meaning of the term TOTAL INCOME here? Does it mean Total Income i.e. GTI less deductions or Business Income only?

If it means Total Income ( GTI less deductions) then which buss profits are to be included in it, presumptive or actual?

Plz reply.... thanx in advance....

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4 Replies

Sharad Saini (Student) (286 Points)
Replied 02 October 2011

if it means total income then it is possible that assessee take benefit of Carry forward and set off and avoid the req of maintaining books and getting them audited???

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CA Mukul Mittal (CA in practice) (384 Points)
Replied 03 October 2011

The assessee is required to maintain books of accounnts only if his total income exceeds the maximum amount not chargeable to tax.

therefore, the impllicaton is, if the assessee is an individual, he is required to maintain bookks only if his TI exceeds 160000/-....

C.A SHASHANK GOYAL (Chartered Accountant) (362 Points)
Replied 03 October 2011

Hi , sharad I think total income means gross total income before giving the chapter via deductions.

Sharad Saini (Student) (286 Points)
Replied 03 October 2011

Mukul Sir,

This is what is my confusion... how u rach to the figure of total income till the time buss income is not ascertained..... if it means income computed in normal course ( without giving effect to sec 44AD) then it means that assessee has to maintain all the records ..... or if it means income taking buss income as 8% of turnover then it is not my intention i mean i do not want to take 8% as my income......