44ad

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2015 Dear Sir,
Actual profit is Rs. 165000/- whereas profit declared in return is Rs.435000/- under sec. 44AD.

Now want to ask that in the capital a/c of proprietor Rs. 165000/- would be credited
or
Rs. 435000/- would be credited?

Please clarify.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 September 2015 You can credit Rs. 435000/-.

Amol S Joglekar

Amol S Joglekar (Expert)
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06 September 2015 It is a very much UNFAIR situation. The profit, for some reason best known to assessee is overstated and now the advice is sought what is to be done?

Books of accounts (Not required to be produced to ITO since the section 44AD is opted) must portray a true and correct view whether or not Accounting Standards are mandatory to that assessee.

Never try to manipulate the books as per Income Tax.

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2015 Actually assessee needs to submit his trading A/c to the bank. Now Trading A/c should be prepaired according to profit declared in return u/s 44AD
or
it should be prepared as per actual profit?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 September 2015 Prepare as declared in the return, in future if you earn more than 8% profit which can be adjusted against it.

Amol S Joglekar

Amol S Joglekar (Expert)
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07 September 2015 No accounting standard ever says that profit as per accountancy and profit as per Income tax MUST be same.

Please note, what you are submitting to bank is the profit s per accountancy. Your income tax profit may differ from accountancy profit. In that case keep the reconciliation ready.

It smells and looks like you are in a situation of cascading effect. One lie leads to a series of lies. After all risk and choice is yours.

Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2015 this is not lie, only a difference of profit percentage. If assessee opts the profit of 8% to prepare his trading a/c then his his closing stock increases causing VAT liability on stock
and if he prepares it as per actual profit then bank person says that it is different from the profit shown in the return?

Querist : Anonymous

Querist : Anonymous (Querist)

Amol S Joglekar

Amol S Joglekar (Expert)
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08 September 2015 Let us not argue on what is the definition of LIE.

My point is simple yer straight forward. Books of account MUST portray a true and correct view of the state of affairs of the business.

Your query says that ACTUAL PROFIT is Rs165,000 and profit declared in return is Rs435,000. This needs to be reconciled.

To me it appears that the books of account books of account are showing actual profit Rs.165,000

Can you please clarify the same.

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