Presumptive taxation u/s 44ad (Income Tax)

This query is : Resolved

Author : Anonymous

( Author )
31 July 2012

My client is in the business of developing property. Till last year i.e. 2010-11 accounting year none of the flats were registered but on the basis of receipt has filed IT u/s 44AD as the receipts were less than than the limit. Now in the year 2011-12 accounting year he has recieved the balance amount which is less than 60 lacs but the flats registered is more than 60 lacs.
So in this year can they be covered U/S44AD or is the tax audit mandatory?

Amol S. Joglekar.

( Expert )
31 July 2012

In its true intent, closing WIP is covered in 44 AB contentions. It is, therefore, advisbale not to use 44 AD for developement business.

Author : Anonymous

( Author )
31 July 2012

Can you explain the taxation method in details and is it mandatory for them to maintain accounts and get it audited?

Amol S. Joglekar.

( Expert )
31 July 2012

Yes. If it is above 60 lakh

Author : Anonymous

( Author )
31 July 2012

Current year total value of flats registered is 65 lacs but out of that 65 lacs he has taken 25 lacs received in f.y. 2010-11 as reciepts and filed income and paid tax by taking profit as 8% so current year he should file it on the basis of entire 65 lacs or 40 lacs??

Amol S. Joglekar.

( Expert )
31 July 2012

assuming he is doing it on receipt basis.. he needs to take the receipts every year

Author : Anonymous

( Author )
31 July 2012

Thanks but if you can kindly elaborate it? I mean whether he should take receipts as 40 lacs or 65 lacs?

And if its 40 lacs then whether he can take exemption of tax audit?

Amol S. Joglekar.

( Expert )
31 July 2012

While on receipt basis, you need to take the receipts irrespective of the fact that when the actual registration is done. You are going by receipt method. Calculate the receipts of financial year 2011-12, if the figure exceeds 60 lakh, then go for tax audit else follow the presumptive method as done by you in earlier year.

Author : Anonymous

( Author )
31 July 2012

Thanks a lot for the reply!!:)

Amol S. Joglekar.

( Expert )
02 August 2012

you are most welcome.