44AD applicability

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2011 A partnership firm registered under service tax act and collecting charges for man power supply, and TDS certificates received u/s 94C from the parties. Total receipts are below 15 lakhs. Can this firm offer 8% income u/s 44AD and also avail partners remuneration and partners interest as deduction

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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09 July 2011 ICAI says 'recruiting agents' will fall in the category of 'business'. Therefore they can opt section 44AD. Partner's remuneration and interest on capital is an allowable deduction from 8% profit so declared, provided the 'deed of partnership' contains such clauses.

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C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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09 July 2011 The requirement of the provisions of Section 44AD is that your turnover should not exceed minimum as provided u/s 44AB and the profit declared should not be less then 8%. If both the conditions are satisfied then you can file your return u/s 44AD.

As regards Partners Interest and remuneration first check whether you have provided the same in the partner deed to allow interest and remuneration to the partner. If yes then it is allowable.

Note that if you provide Partners Interest and remuneration and the profit declared goes below 8% then you have get your accounts audited u/s 44AB

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