Taxable income: 0, and tds claimed, defective?

SURANA (PROPRIETOR) (515 Points)

09 April 2016  

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?