Applicablity of maintain books of accounts for lic agent?

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Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2012 Actually I want to know what is the income limit above an LIC agent is liable to maintain his books of accounts u/s 44AA?

Sir if an LIC Agent is getting more than Rs. 2 lacks as a Commission, and then is it mandatory to maintain books of account?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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22 July 2012 When income from business or profession is likely to exceed Rs 1.20 lac an assessee is required to maintain books of account.
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In case of an LIC Agent, Commission of 2 lac brings him into the criteria.
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One important thing,

where the Books of Account have not been specified in the Act the assessee has to maintain such Books of Account and other documents as may enable the AO to compute his total income.
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So, in the absence of maintaining Regular Books of Account, generally penalties are not levied where proper documents are being produced.
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If you produce the documents of your expenses and Form 16A, any competent AO will calculate your Total Income and will make the assessment.
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RENGARAJ R.K

RENGARAJ R.K (Expert)
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22 July 2012
Income Tax Act, 1961

Section 44AA . MAINTENANCE OF ACCOUNTS BY CERTAIN PERSONS CARRYING ON PROFESSION OR BUSINESS.

(1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified 707 by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.

(2) Every person carrying on business or profession [not being a profession referred to in sub-section (1)] shall, - (i) If his income from business or profession exceeds one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds ten lakh rupees in any one of the three years immediately preceding the previous year; or

(ii) Where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed ten lakh rupees, during such previous year; or

(iii) Where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD or section 44AE or section 44AF, as the case may be, and the assessee has claimed his income to be lowerthan the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such previous year, keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.

(3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe, 709 by rules the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form the manner in which and the place at which they shall be kept and maintained.

(4) Without prejudice to the provisions of sub-section (3), the Board may prescribe, by rules, the period for which the books of account and other documents to be kept and maintained under sub-section (1) or sub-section (2) shall be retained.

Lic agent is not listed in sub-section 1 and your income has not crossed 10 lacs in the previous 3years and therefore books of accounts not required.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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22 July 2012 Thanks Mr. Rangaraj for providing the text of the section. If Subsection (2) is read,
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It deals with 2 criteria -
1. Income
2. Turnover
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If we go through the initial lines of the sub section it will be emerge out that the income criteria applies to both business and profession.
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Further, these criteria are dealt with connective "or". Which means that either income of 1.20 lac or Turnover of 10.00 lac is required. In case any one out of the two criteria is satisfied, there exists a need to maintain the Books of Account.
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I hope, you will agree with my previous reply.
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