44ad
This query is : Open
16 December 2013
Please tell any one an we file income tax return without tax audit U/s 44AD on 8% of Sales when original profit is more than 8% of sales as per books of accounts maintained i.e.as per profit and Loss A/c?
(Ex : Sales Rs.25,00,000 ; Net profit Rs.5,00,000; Declared Income u/s 44AD is 8% of sales i.e.Rs.2,00,000 )
(Ex : Sales Rs.25,00,000 ; Net profit Rs.5,00,000; Declared Income u/s 44AD is 8% of sales i.e.Rs.2,00,000 )
16 December 2013
Can you file yes. But then avoid making accounts. If you maintain accounts, it shall be open for the AO to ask for the same.
17 December 2013
Dear sir please explain..
How can he ask? u/s44AD clearly says while computing income of assesse under section 44AD, the Assessing officer does not have the power to assess anything in excess of returned income if returned income is more than 8 per cent of total receipt/sales consideration. Even dis-allowance provisions of section 40,40A and 43B are not applicable.
The section not says books not maintained persons use and file the return u/s 44AD but the section says if you file the return u/s44AD the no need to maintain books of account..
How can he ask? u/s44AD clearly says while computing income of assesse under section 44AD, the Assessing officer does not have the power to assess anything in excess of returned income if returned income is more than 8 per cent of total receipt/sales consideration. Even dis-allowance provisions of section 40,40A and 43B are not applicable.
The section not says books not maintained persons use and file the return u/s 44AD but the section says if you file the return u/s44AD the no need to maintain books of account..
17 December 2013
But he certainly have the power to check the turnover whether it has been cal correctly or not.
31 December 2013
please reply sir.. I want more clarification about this..
31 December 2013
Dear Sriram,
See, there are two school of thoughts on this:
1. Once the turnover figure is correct, AO doesn't have the option of looking at the profit of the asseessee as implicit to allowing income claim at 8% is allowing expense claim at 92%. Thus leaving no scope of hidden income.
2. However, there is another school of thought which says that AO can check the veracity of claims and can add income in excess of the 8%. (as such this school of thought is not tenable). The important thing though is that - (a) you ensure that turnover figures are absolutely correct while reporting and (b) no books are maintained except for cash book and debtors/creditors.
See, there are two school of thoughts on this:
1. Once the turnover figure is correct, AO doesn't have the option of looking at the profit of the asseessee as implicit to allowing income claim at 8% is allowing expense claim at 92%. Thus leaving no scope of hidden income.
2. However, there is another school of thought which says that AO can check the veracity of claims and can add income in excess of the 8%. (as such this school of thought is not tenable). The important thing though is that - (a) you ensure that turnover figures are absolutely correct while reporting and (b) no books are maintained except for cash book and debtors/creditors.
16 February 2014
ok sir.. I agree with u.. finally your conclusion is should not maintain books of accounts.. but service tax department asking balance sheet and profit & loss account then bankers also asking Balance sheet etc.. for loan purpose.. in this situation what we should do..
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