Clarification regarding section 44ad

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Sanjiv Kumar Goel (Querist)
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16 August 2011 plz clarify the provision of section 44AD of I T Act as written in Mr. Girish Ahuja' s book professional approach to Direct Taxes.

" An assessee with turnover below Rs. 60 lakhs, who shows an income below the presumptive rate prescribed under these provisions, will, in case his total income exceeds the taxable limit, be required to maintain books of accounts as per section 44AA (2) and also get them audited and furnish a report of each such audit as required under section 44AB."

My question is that if an assessee (whether wholesaler or Retailer) has turnover below Rs. 60 lakhs and his total income is below the taxable limit i.e. Rs. 1,60,000/- and his net profit precentage is below 8%, this type of assessee is required to get audited u/s 44AB or not.

CA Saiyum khan

CA Saiyum khan (Expert)
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16 August 2011 yes such type of assessees as stated by you are arequired to get their account audited. If the 8% of the turnover value is less than the maximum amount not chargeble to tax then only he is exempted from maintaining books of account u/s 44AA and getting hem audited U/s 44AD.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 August 2011 The answer is no, because section 44AD(5) specifically says so.

Vivek Mehta (CA, DISA,CS, MBA)

Vivek Mehta (CA, DISA,CS, MBA) (Expert)
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16 August 2011 Yes every Assessee who claims his profit bellow the 8% limit even though the assessee is having income lower than the basic exemption limit, shall be notwithstandingly required to maintain books of accounts and shall be required to get his books of accounts audited.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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17 August 2011 The assessee is required to maintain books of account.
.
Section 44AD(5) clearly provides that tax audit is required for only those assessees whose total income is taxable. I agree with
Mr. warrier's view.
.

Sanjiv Kumar Goel

Sanjiv Kumar Goel (Querist)
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20 August 2011 Thanks Mr. Warrier & Mr. Bafna
I also agree with both of you that If assessee's total income is below the taxable limit , there is no requirement to get audited u/s 44AB eventhough his net profit precentage is below 8% of turnover.

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