Applicability of audit as per sec. 44ad
This query is : Resolved
29 September 2012
Dear Expert,
A partnership firm doing business of Builders and Developer has incurred expenses on purchases, labour charges and other indirect expenses on a residential project in 2011-12. The project was under construction and there was no sale agreement done in 2011-12, hence there is no sales turnover. All the cost incurred is in WIP in 2011-12. WIP is Rs.95 lacs. Due to this there is no profit or loss. My question is whether audit is required?
A partnership firm doing business of Builders and Developer has incurred expenses on purchases, labour charges and other indirect expenses on a residential project in 2011-12. The project was under construction and there was no sale agreement done in 2011-12, hence there is no sales turnover. All the cost incurred is in WIP in 2011-12. WIP is Rs.95 lacs. Due to this there is no profit or loss. My question is whether audit is required?
29 September 2012
If there is no sales then turnover is Zero i.e below Rs.60 lacs limit prescribed by the 44AB so Tax audit not applicable.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
29 September 2012
Ya, but, my question is whether audit is applicable as per Sec 44AD or not?
30 September 2012
According to the section 44AD minimum of 8% profit you have to offer for income tax purpose in your case your turnover is nil so 8% profit is ZERO However as per your books also Zero or for the reason of indirect expenses it may be loss as per your books But according to the section 44AD you have to show no income or loss I.e Zero Income. I.e you don't allow to carry forward off loss so if like to loose carry forward benefit of loss then you no need to make tax audit otherwise it required to tax audit.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
01 October 2012
The assessee is bound to get the books of accounts audited, if the following two conditions are satisfied:-
1. His profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) i.e. his net profit is lower than 8% of turnover.
and
2 Whose total income exceeds the maximum amount which is not chargeable to income-tax.
In case condition No.2 is not satisfied, therefore need not get accounts audited even if showing loss for revenue expenses claimed from this business.
1. His profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) i.e. his net profit is lower than 8% of turnover.
and
2 Whose total income exceeds the maximum amount which is not chargeable to income-tax.
In case condition No.2 is not satisfied, therefore need not get accounts audited even if showing loss for revenue expenses claimed from this business.
01 October 2012
Yes, Prakash kochar is correct. I am sorry because i forget about the new amendment to the section 44AD at the time of replying to the query. Sorry for my mistake.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Opting our of sec 44AD
- GST Treatment of Insurance Commission for Existing GST Holder
- Regarding TDS Applicability For Director Remuneration
- LC charges in relation to Asset purchased should be Capitalised ?
- Form 121 & TDS deduction
- SALE OF MOTOR CAR BY REGISTERED INDIVIDUAL
- Copyright software
- Regarding appeal to GSTAT
- Multiple trade mark
- Value of property in capital gain
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
- Updated return in budget 2026
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
