09 June 2015
Whether partnership firm carrying on business and audited u/s 44AB of IT Act is required to maintain prescribed books of accounts u/s 44AA
09 June 2015
Who is covered under section 44AA? There are two basic conditions that define the scope of section 44AA of Income Tax Act. This are- Specified profession Turnover or income limits Specified Profession: Every person carrying on specified profession is covered under the provisions of Section 44AA of Income Tax Act. Specified profession include legal, medical, engineering, accountancy, film artists, CA, CS, information technology or any other profession as notified by Central Board of Direct Taxes, Thus, such specified professionals are required to maintain the specified books of accounts so as to enable computation and assessment of assessee’s total income. Turnover or income limits: If a person is carrying on any business or profession and The income from such business or profession has exceeded Rs. 120000 in any of the three previous years; or The turnover or gross receipts have exceeded Rs. 1000000 in any of the three previous years The person has to maintain prescribed books of accounts as mentioned in Rule 6F. ** In case of newly set up business, three previous year’s turnover/income condition can’t apply so only current year income is considered in such case. Thus, in case any assessee satisfies both the conditions of being involved in specified profession and falling within the turnover/income limits, he has to maintain the prescribed books of accounts so as to comply with the provisions of Section 44AA of the income tax act. For example, Mr. A & B have started their clinic together in East Delhi. Mr. A is a heart surgeon while Mr. B is a child specialist. During FY 2013-14, Mr. A earned Rs. 600000 while Mr. B earned Rs. 110000 as their total income. So, from now Mr. A has to maintain prescribed books of accounts for the purpose of Section 44AA while Mr. B doesn’t need to. He can maintain any books of accounts so as to prove the computation of his income. Prescribed Books of accounts in Section 44AA For the purpose of complying with the provisions of Section 44AA of Income Tax Act, Rule 6F provides a list of documents that the specified persons have to maintain- Cash Book Journal Ledger Carbon copies of bills of amount more than Rs. 25 or more Original Bills and receipts in respect of expenditures for amounts exceeding Rs. 50 ** In case of medical profession, some additional books of accounts are also needed to be maintained such as daily cash register, stock register etc.
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