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Tax Audit Applicability

Amish Maknojia (Student) (507 Points)

03 July 2019

hello!
Will tax audit be applicable in these 2 scenarios:

1.Partnership Firm having turnover less than 1cr and Profit below 8%/6%

2. Partnership firm is making loss and turnover is less than 1cr.

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10 Replies

Manish Rawat (35 Points)
Replied 03 July 2019

In both case tax audit is not applicable
because turnover limit is less than 1cr.

1 Like

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Amish Maknojia (Student) (507 Points)
Replied 03 July 2019

thank you Manishji
so no tax audit under 44AD in scenario 1?

Suresh Thiyagarajan (Student) (3986 Points)
Replied 03 July 2019

1. A person carrying on business if his gross receipt or turnover exceeds Rs. 1 crore during the year he will be required to his books of accounts audited u/s 44AB.
2. Since your Turnover in both the cases has not crossed Rs. 1 crore he will not be required to get his accounts audited u/s 44AB
Please correct me if the above solution has an alternative view.

1 Like

KARTHIK DAMLE (ARTICLED ASSISTANT) (87 Points)
Replied 03 July 2019

both the cases tax audit is required. loss is nothing but profit less than 8%/6%. but still this has been a topic of discussion in my circle from the past few years. I have handled both the situations in my work life. still no objection was raised by ITD

2 Like

Rishabh Agarwal (5 Points)
Replied 03 July 2019

Tax audit is required in both the situation because in first situation your profit is less than 8%/6% so tax audit should be done

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 03 July 2019

1.Partnership Firm having turnover less than 1cr and Profit below 8%/6%

2. Partnership firm is making loss and turnover is less than 1cr.

Ans :
*Both will be file u/s 44AA then Tax audit today not applicable...

**In case both will file u/s 44Ad the Audit is applicable as per sec 44AD (less than profit limit).

Amish Maknojia (Student) (507 Points)
Replied 03 July 2019

@ Karthik Damle thank you for your response but..
as per 44ad(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required undersection 44AB.
in case of partnership firm income tax is payable even on a profit of ₹100 so the loss will be considered as income below taxable limit as per the aforementioned provision, so accordingly isn't it exempted from maintaining books and audit?

T.T.VIJAYAPRAKASH (properter) (253 Points)
Replied 04 July 2019

1 PARTNERSHIP TURNOVER RS. 80 LAKS

2.PARTNER SALARY RS.3,60,000 AFTER BOOK PROFIT RS. 90,000/-

3. PROFIT BELOW 8% AND 6%

4. IF APPLICABLE FOR 44AD? ARE REGULAR FILING?

5. PARTNER SHIPP ALLOWED U/S 40?

PL APPLICABLE AUDIT

THANKS

KARTHIK DAMLE (ARTICLED ASSISTANT) (87 Points)
Replied 04 July 2019

@ amish maknojia agreed. but in partnership firms there is no basic exemption limit hence even if you earn rupee one it is taxable. so if such profit is less than 8%/6% then 44AA is applicable and books to be audited. this is my opinion

1 Like

Ravi SADhiyan (Practice) (4510 Points)
Replied 04 July 2019

Originally posted by : Amish Maknojia
	hello!Will tax audit be applicable in these 2 scenarios:1.Partnership Firm having turnover less than 1cr and Profit below 8%/6%2. Partnership firm is making loss and turnover is less than 1cr.