44ad or capital gain

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deepak (Querist)

16 January 2016 A person shows that he is coverer under section 44AD having total turnover below 1Crore. He purchases a land for 4 lacs which he shows as stock in trade for his land business in F. Y. 2010-11 and sells it for Rs. 60 Lacs in FY 2012-13. Please clarify whether he il liable to pay tax on profit of Rs. 56 lacs or he show his income at 8% of rs. 60 lacs which is his turnover in this case u/s 44AD.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

17 January 2016 In Section 44AD(1)- It has been prescribed that 8% or higher income can be declared by the assessee. Please go through the following excerpt from Section 44AD(1)-
"or, as the case may be, a sum higher than the aforesaid sum
claimed to have been earned by the eligible assessee ,
shall be deemed to be the profits and gains of such business..."
.
as the case may be- means based on the facts of the case
.
claimed to have been earned by the eligible assessee - here whose Claim- of the assessee or of the AO ?
.
It is therefore, advisable to show the real business income as it can be claimed by the department also, on the basis of registered sale deeds, that the assessee has earned higher income.

deepak

deepak (Querist)

20 January 2016 Thanks for the clarification. Bafna Ji.

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