Taxable income: 0, and tds claimed, defective?

ITR 476 views 3 replies

SURANA

PROPRIETOR

526 Points Joined October 2010

Hello

One Partnership Firm received a Notice u/s 139(9)

with the Error under Annexure - A

Error Code : 2

Error Descriptttion : No Receipt or Income has been offered in any heads of the Income for the TDS/TCS Claimed in the Return.

Probable Resolution : TDS/TCS can be claimed only for income/receipt which is offered to tax during the relevant AY.

Well now this assessee case the Turnover being less then 1Cr , so he went for 44AD, and the Profit before Interest to Partner and Remuneration to Partner is more then 8%.

But after Interest and Remuneration the Taxable Profit is Zero.

So is the ITR Defective for claiming the TDS which was actually shown in the Total Receipt.

For Example:

Total Receipt : 4025513/- (Whereby TDS of Rs. 72006/- deducted under 194C)

Profit Before Interest and Remuneration to Partner : 361637/-

Interest to Partner : 243702/- (at 12%)

Remuneration to Partner : 117835/-

Hence Net Taxable Income : 0

Now as the Total Income is more then 8% before Interest and Remuneration to Partner hence the asseesee went under 44AD, which net taxable income being Zero and refund for the TDS.

what is your view on it?

Replies (3)

Kapil Tiwari

article assistant

23 Points Joined April 2014

Under Section 44 AD, Income would be presumed to be 8% of the total turnover of the assessee, only if total T/O of assessee is less than 1 cr.

Under income presumed you can't less your expenses on income. so as per rule of 44AD your return is defective.

Nishant Singla

Chartered Accountant

31 Points Joined February 2016

It could not be a defective return as section 44AD allowed to deduct the partner Interest & remuneration. and if it is nil then there is notihing which restrict the claim of TDS.

Tribhuvan Aditya Singh

Student as well as Self-employed

3710 Points Joined September 2007

the return is defective because min. remuneration allowed to partners will be 150000/- and in that case this firm will be at loss. so nil profit is not possible. correct your return and file again against notice of 139(9). only then tds refund will be processed.