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Whether sec 44ad applicable ?

Trupti Dhedhi (Advocate) (9 Points)

16 March 2016

in my case assessee is partnership firm & having turnover of Rs. 61,25,670/- , profit after interest & remuneration to partners is nil. remuneration to partner is Rs. 1,30,678/- and interest @ 12% 2,59,162/-. and profit @ 8% of turnover is Rs. 4,90,054/-. please answer that what should i do; 1) go for audit. 2) go for sec 44AD 3) normal return ITR-5 (no income hence not cover under taxable income)

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7 Replies

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 16 March 2016

In your case, as there is no other Income, you can offer under Normal Provisions of Income tax act and show either original Loss or NIL Profit and Pay "NIL" Tax. If you offer under section 44AD then your presumptive income shall be 100213 (after Remuneration and Interest to Partners) and liable to pay tax of Rs.30,966. So it would be better to offer under Normal provisions of Income tax. Since you are firm and if you have any other income of even 10 Rupees then you are liable to tax audit u/s.44AB if you offer under Normal Provisions. So if you dont have any other income then offer income under Normal provisions and not liable for tax audit u/s.44AB

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Deepak sharma (Learner) (1431 Points)
Replied 16 March 2016

You can file u/s 44AD and as per figures of Interest & Remuneration Provided by you, You can show your profit as for Rs 100214.00

In Case of firm -> Total of (Remuneration + Interest Paid to Partners + Profit after Remuneration & Interest) should not be less than 8% if opting for 44AD.

Profit before Remuneration & Interest Paid to Partners should not be less than 8%.

Thanks Regards

Deepak Sharma

Apurvakumar k shah (Senior Auditor) (417 Points)
Replied 16 March 2016

Ur calculation of salary is wrong. As per IT act salary is 90% of first 300000 profit. So salary is 90% of 130678 is 117610 is the eligible salary and balance is profit Rs. 13068 {130678-117610}

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 16 March 2016

Mr.Apurvakumar sir, As per section 40(b), Remuneration allowable shall be Up to Rs.3Lakhs- 1.5Lakhs or 90% of Book Profit which ever is higher. Therefore Minimum Remuneration allowable as per section 40(b) shall be Rs.1.5Lakhs even though there is a Loss before claiming of Actual Remuneration and Interest. Hence even though 90% Book profit (117610) is lower than Rs.1,30,678 you can take entire 1,30,678 as Remuneration for purpose of Computation of PGBP

sachin (Accountant ) (57 Points)
Replied 17 March 2016

Please tell me bookprofit rs.310760 What maximum remuneration to partners allowed and net proft rs 4344 allowed as maximum remuneration to partner . Department already issue notice me non filing of income tax for A.Y 2011~12 what is maximum penalty charge under income tax non filing and my TDS 25549 can be refund claims and set of provision and AMT Applicable for A.Y 2011-12

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Arun choudhary (articalship) (153 Points)
Replied 17 March 2016

You can file return under 44AD and as per figures of Interest & Remuneration Provided by you, you have show your profit of Rs 100214 on which 30% tax slab is applicale.or if you dont want to pay any tax then you can go for audit of your accounts.

Sejal Patel (ca) (61 Points)
Replied 18 March 2016

As par the provision u/s 44Ad if your profit is less than 8% of your ternover than go for audit, hence for that there must be profit, but if firm is in situation where there is no prifit no loss after providing salary & remuneration to partners. and time limit for audit report is expaire than what is benifical for firm. regulat ITR 5 or sec 44AD paying tax at 30% on 8% of turnover.