24 August 2022
Query 1. 44ADA and ITR under Normal provision.
I had disclosed income under 44ADA in AY 21-22. Now in AY 22-23 I want to opt out of 44ADA and disclose income by filing return under normal provision giving all the details of P&L and B&S declaring income less than 50%. Can I show it by filing ITR 3 or do I have to file ITR with audit since income is less than 50%.
Query 2. Is Franchise income is Professional Income???.
Client has franchisee of Pathology Lab and has blood Collection Center of Pathology Lab. TDS is being deducted under 194JB. The nature of income is not profession as such because it is only a collection centre. I thought to show it as business income but I feel ITR will not get process since TDS deducted under 194JB. What can be the appropriate measure in this regard.
24 August 2022
1. Yes. it can be changed to normal assessment, without any audit liability. 2. What is the constitution of the lab? Any pvt. company or firm etc...
24 August 2022
1. That means unlike 44AD there is no mandatory provision of 5 years to follow once opted 44ADA. So assessee can switch between normal provision and 44ADA. Is it so?
So what is the purpose of following provision.
44ADA (4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.
2. Franchise taken by Individual of Metropolis Healthcare Ltd
24 August 2022
1. Yes, I forgot to mention the condition of total income below Exemption limit. In case total income is above the BEL, tax audit will be applicable. Though there is no condition of at least 5 years in Sec. 44ADA, but the said condition is for each previous year for the professionals who are covered u/s. 44AA(1) of IT act. 2. Again qualification of the individual matters. If he is qualified as per the sec. 44AA(1) of the act, sec. 44ADA will apply.
24 August 2022
Even though it is business for the individual, but ITR cannot be filed u/s. 44AD, because TDS u/s. 194JB has been deducted. File ITR 3 under normal assessment, declaring it under business code.
24 August 2022
That means I have to get audit done since income to be declared is less than 50% ( which exceeding basic exemption limit). Previous financial year since income was not much so I had filed in 44ADA due to 194JB TDS. This year I can not go for 44ADA as actual income is not more than 50%.
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