Applicability of u/s. 44ad

This query is : Resolved

Nilesh Gajjar (Tax Pract.) (Querist)
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03 August 2011 Good Morning Members/Friends,

I have one query regarding Applicability of U/s. 44AD

One Partnership Firm having business of Web Designing/Developing, SEO, Online Data Entries etc. Can the firm take the benefit of U/s. 44AD as presumptive income. The gross receipt of the firm is below ` 60.00 Lacs.

Hope the members will reply the same ASAP.

Will be very thankful to you.

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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03 August 2011 Web Designing is considered as profession and not business. So, you cant take the benefit of Section 44AD. Moreover, if the Gross Receipts are in excess of Rs. 15 Lakhs, then audit u/s 44AB is applicable.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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03 August 2011 It is a matter to be decided by the technical persons like you whether your so called business comes under the category of Profession of Information Technology.

However, according to the notification No SO890(E) of dated 26-9-2000, issued in connection with Section 10A, 10B and 80HHE the CBDT has categorised such services as of yours into Information Technology enabled services.

In section 10A ,10B the phrase used for income is Profits and Gains. If we take profit from business then gain represents the profession.

Further, section 44AA covers Profession of Information technology under the definiton of Notified professions vide notification No SO 385(E) dated 04-05-2001.

As section 44AD is applicable to business. Whereas, in the light of above discussion , chances can not be ruled out that the business carried out by you , may be termed as profession of information technology.

To avoid such a situation at a later stage, in case arise, it will be better not to opt for Section 44AD.

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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03 August 2011 However Partnership Firm, who is resident can take the benefit of section 44AD but if firm is doing Business.
Business is different from profession. Your's is a profession and therefore you can not take the benefits of this section.

BTW.. This section has also excluded a limited liability partnership firm from its scope.

Nilesh Gajjar (Tax Pract.)

Nilesh Gajjar (Tax Pract.) (Querist)
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04 August 2011 Thanks for replying the query & support.

NILESH H GAJJAR
AHMEDABAD

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