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U/s 44ad (Income Tax)

This query is : Resolved

ravikanth

( Author )
05 July 2012

My client is doing business of lodging. He is collecting Room Rent Charges, Service of Room Cleaning and Extra bed charges, Whether this business is covered u/s 44AD or not!

CA Rahul Gupta

( Expert )
05 July 2012

yes, assessee can opt sec 44AD for any business. you can read below mentioned provision as follows:- From Assessment year 2011-12, a new section 44Ad has been inserted inthe Income-tax Act to replaceexisting sec.44AD 744AF.
The new Section will be aplicable to any business ( whether it is Retail trade,or Civil construction or any other business).
The provisions of the new Section will be applicable if the following conditions are satisfied:
1.Assessee eligible for the purpose of this Section has to be an Individual/a HUF/a Partnership Firm( not being a LLP);
2.The assessee has not claimed any deduction u/s.10A,10AA,10B,10BA,80HHto 80RRB in the relevant Assessment Year;
3.That is not engaged in the business of plying, hiring, or leasing goods carriages referred to u/s. 44AE; and
4. Total Turnover/ Gross Receipt of the Assessee in the previous year should not exceed Rs. 60.00 lakhs.
if you are satisfied with my answer please give me revert back.

Ravikant

( Expert )
05 July 2012

Yes, It is covered under 44AD. Agree with above expert.

Kaushik Vinod

( Expert )
06 July 2012

I add further that
The provisions of this section, notwithstanding anything contained in the foregoing provisions, shall not apply to—
(i) a person carrying on profession as referred to in sub-section (1) of section 44AA;
(ii) a person earning income in the nature of commission or brokerage; or
(iii) a person carrying on any agency business.]

VIPUL SHAH

( Expert )
22 July 2012

Adding to above please reply following
My one of the client is doing future option business in shares (derivatives) T.O.for the same is 5lcs (3lac on loss side and 2 lac on profit side)

as per books loss is one lac but if we take 8% it comes to 40k (below the exemption limit)

is 44ad is applicable in this case ?
can i take c/f of 1 lac loss ?

CA Rahul Gupta

( Expert )
23 July 2012

No, Audit is not required, If income is lower than the Basic Exemption Limit i.e 40K < 2L(BEL)
No, You can not carry forward Loss arising from Shares trading ( Derivatives) in this case.

VIPUL SHAH

( Expert )
23 July 2012

Dear CA Rahul

Thanx for the reply

my question is whether 44AD is applicable to derivatives also ?

Is it compulsory to offer 8% as income and forget loss in case of derivate as well ?

CA Rahul Gupta

( Expert )
23 July 2012

Derivatives is also covered under sec 44AD
under Sec 44AD, Deduction under chapter VI (Set off and carry forward of losses)is allowed except derivative loss.Yes it is compulsory to show minimum 8% as income under this section.