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tax audit due to section 44AD

Pawan Singhal (chartered accountant) (655 Points)

09 March 2011

if income is lower than taxable income and profit declared u/s 44ad is lower than 8 % . is tax audit req.

my view is that audit is not req.

plz explain if adverse view

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5 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 10 March 2011

Sec. 44AD: Special provision for computing profits and gains of business of civil construction, etc.

Applicable to an assessee engaged in the business of civil construction or supply of labour for civil construction and having gross receipts paid or payable not exceeding an amount of Rs 40 lakh.

Civil construction includes:

1. The construction or repair of any building, bridge, dam or other structure or of any canal or road;

2. The execution of any works contract.

Income on which tax is payable

8% of the gross receipts paid or payable to the assessee in the previous year on account of such business�Deemed Income,

A sum declared by the assessee in his return of income,

whichever is higher, shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession notwithstanding anything to the contrary contained in sections 28 to 43C.

Exception

An assessee may claim lower profits and gains than the profits and gains if he keeps and maintains such books of account and other documents as required by section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB.

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Mohammad Asif (chartered accountant) (191 Points)
Replied 26 March 2011

Yes, if profit declared U/s 44AD is lower than 8% The assesse will be required to maintain books of account under section 44AA and get his account audited .