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Applicability of Section 44AD to builder

CA Simarpreet Singh Gulati (Chartered Accountant) (525 Points)

20 June 2011

If a builder declares income u/s 44AD then whether the advance received from the customers during the construction period shall be treated as gross receipt for charging tax @ 8% or the tax shall be charged when the possession of the flat / duplex is given to the customer in the next financial year?

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4 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 20 June 2011

total receipts/ turnover which ever is higher is to be taken for purpose of calculation, advance received are also deployed in some works in progress which has value more than advance, this concept works.

Anshul (.) (375 Points)
Replied 20 June 2011

SEC.44AD-----PRESUMPTIVE TAXATION

In the case of assessee, being an individual , HUF or a firm other than LLP carrying on any business except the business of plying , hiring or leasing goods carriages referred in sec. 44AE and whose gross recipts from such business does not exceed Rs. 60 Lakhs,a sum equal to 8% of the gross recipts paid or payable to the assessee or such higher sum as declared by the assesse in the return of income shall be deemed to be the income from such business......

as in the section it states that amont to be taken as gross recipts if it is PAID OR PAYABLE.

so in the above case advance money recived from the customer shall be treated as the gross recipt for the current financial year and not to be taken when the possession of flat is being transferd.............

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 20 June 2011

Originally posted by : AnShUL bhagwat
	SEC.44AD-----PRESUMPTIVE TAXATION In the case of assessee, being an individual , HUF or a firm other than LLP carrying on any business except the business of plying , hiring or leasing goods carriages referred in sec. 44AE and whose gross recipts from such business does not exceed Rs. 60 Lakhs,a sum equal to 8% of the gross recipts paid or payable to the assessee or such higher sum as declared by the assesse in the return of income shall be deemed to be the income from such business...... as in the section it states that amont to be taken as gross recipts if it is PAID OR PAYABLE. so in the above case advance money recived from the customer shall be treated as the gross recipt for the current financial year and not to be taken when the possession of flat is being transferd.............