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Tax audit for partnership firm

Magan (Service) (58 Points)

30 June 2018

Querry is related to A professional LLP firm: Can this firm declare the profit less than 50% (FY 17-18 Receipt is 18 Lacs) ? Upto what extant partners can withdraw the Remuneration ? And what is the deadline for filing of ITR in this case.

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13 Replies

Ifteqar Mohammed (7 Points)
Replied 30 June 2018

What is tax liability for short term capital gains

1 Like

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 30 June 2018

"Can this firm declare the profit less than 50% (FY 17-18 Receipt is 18 Lacs) ?

Yes......

Upto what extant partners can withdraw the Remuneration ?

Working partner/s can draw remunerations as per the LLP deed, but subject to section 40(b) of IT act....

And what is the deadline for filing of ITR in this case.

As no Tax audit applicable in this case, so last date for filing ITR remains 31.07.2018

rama krishnan (12239 Points)
Replied 01 July 2018

if you declare profit less than 50% then you need to audit your books

2 Like

Magan (Service) (58 Points)
Replied 02 July 2018

Thanks Sir,

You mean no need of tax audit even if he delcares the profit less than the 50%, Hence date of filing ITR will be 31st July.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 02 July 2018

Yes.

Rule 24(8) exempt the LLP from the Audit of its accounts if its turnover does not exceed, in any financial year, Rs. 40 lakhs or its contribution does not exceed Rs. 25 Lakhs.

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Magan (Service) (58 Points)
Replied 02 July 2018

Sir, Thanks Again ! Now i am getting to conclusion.

So in my case i can declare the profit less than 50% since i am safe under LLP Rule 24(8) .

Can my remuneraiton exceed over and aobve 40b limitation, If i choose to audit my accounts ? Hope ans. will be "YES"

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 02 July 2018

Whether audit or not, remuneration to partners is restricted to section 40(b) of IT act, above which it is disallowed......

CA Ashish Agarwal (Practice) (127 Points)
Replied 10 July 2018

Audit is required under income tax act and not as per companies act. kindly refer section 44ADA about profession.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 10 July 2018

Originally posted by : CA Ashish Agarwal
	Audit is required under income tax act and not as per companies act. kindly refer section 44ADA about profession.

Dear,

Any reference for applicability of section 44ADA over LLP..... or OPC .... or companies?

CA Ashish Agarwal (Practice) (127 Points)
Replied 10 July 2018

Please refer to section below, it is for assessee having PGBP as professional income

44ADA. (1) Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession".

(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.

(3) The written down value of any asset used for the purposes of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) 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 (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.]

Attached File : 1158793 20180710152525 44ada.pdf downloaded: 83 times

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 10 July 2018

I am still under the impression that section 44ADA is not applicable to LLP.

I would be glad to learn any affirmative reference about its applicability over LLPs ...

If applicable over LLP, why should it not be applicable over companies, please provide any reasoning.....

CA Ashish Agarwal (Practice) (127 Points)
Replied 10 July 2018

If you refer 4th point which says assessee who cliam pgbp

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 10 July 2018

Yes, but it specifies only 'professional'..........

which is already stated at point 1 who is engaged in a profession referred to in sub-section (1) of section 44AA ......... nothing specific, dear........