Applicability of Sec 44AB
This query is : Resolved
26 September 2009
My client is a builder and during the year he has commenced his buisness.He has commenced construction of a commercial building for which he has received an advance amounting to Rs 75 lakhs from several customers towards advance booking. He hasnt completed construction by March 2009 or neither he has raised any invoice on his customers for the work completed till date. Will he be required to get his accounts audited u/s 44AB as his total advances have exceeded 40 laks?
26 September 2009
Eventhough he has not raised bills he has to follow percentage of completion method or as per the agreement with the purchasers accrual system of recognising hte income. When you calculate like this if the income exceeds 40lakhs he is subject to tax audit irrespective of whether he has raised the bills or not.
26 September 2009
Support the above view. Pl comply AS-7 and decide the tax audit applicability.
26 September 2009
agree with expert
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