22 July 2016
I plan to e-file my return for FY 2015-16 in form ITR-4. I am not using ITR-4S as the sources of income include salary, capital gains, business & profession, house property and income from other sources. The income from business is derived by trading in futures and options (FNO). The turnover of trading is Rs 90 lacs and the net profit from business declared is Rs 9.9 lacs (about 11%). As the turnover is below the limit of Rs 1 cr and profit is > 8% of turnover, I understand that I am eligible to report my business income u/s 44AD (presumption basis) and that maintenance of books of accounts (44AA) and audit of accounts (44AB) are not required. I shall provide the relevant profit information in P&L schedule under ‘NO ACCOUNT CASE’.
Please answer my following queries considering the above information.
1. Am I correct in reporting my business income under ‘No Account Case’ in ITR-4 or maintenance of books of accounts is mandatory?
2.Does the criteria of Profit not less than 8% of turnover apply on gross profit basis or net profit basis?
3. Shall I be compliant with income tax rules if I declare net profit just equal to 8% of turnover?
I tend to infer from your response to Q#3 that by going for ITR-4S I can avail the provisions of sec 44AD and am not required to maintain books of account u/s 44AA(2)(i) when turnover is 90 lac and net profit is not less than 8% of turnover. However, I understand from your response to Q#1 that ITR-4 'No Account Case' cannot be used if one is availing provisions of 44AD. I observe that in ITR-4 Schedule BP, Item A-35 (i) allows to enter 'profit to deemed under section 44AD' and entry into this items updates item A-4. What I infer from this, that ITR-4 may also be used to avail the provisions of 44AD, especially when one also has income from sources (like capital gain and more than one house properties) that are not allowed in ITR-4S. Am I correct?
CAclubindia
