Commission received,filing return u/s 44ad
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 January 2012
PHM is my client, a fruit merchant and received a commission
of Rs.3,48,600/-.He did not maitain any accounts and No VAT returns as fruits are exempted
Can he he file his return of income u/s 44AD on gross
commission of Rs.3,48,600/- at 60% of the commission
received.
any precautions to be taken kidly advise me.Ofcourse we
will consider credits in his bank a/cs and investments made
Kindly guide me.
PHM is my client, a fruit merchant and received a commission
of Rs.3,48,600/-.He did not maitain any accounts and No VAT returns as fruits are exempted
Can he he file his return of income u/s 44AD on gross
commission of Rs.3,48,600/- at 60% of the commission
received.
any precautions to be taken kidly advise me.Ofcourse we
will consider credits in his bank a/cs and investments made
Kindly guide me.
13 January 2012
You can file PHM's return U/s 44AD.
.
Encourage the client to pay tax as he is saving a good amount by not maintaing Books of A/c and has minimum risk of scrutiny.
Pursue him to show 70% at least. If tax is being paid by him willingly , your fee will also be paid gratefully.
.
Encourage the client to pay tax as he is saving a good amount by not maintaing Books of A/c and has minimum risk of scrutiny.
Pursue him to show 70% at least. If tax is being paid by him willingly , your fee will also be paid gratefully.
Message likes :
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Querist : Anonymous
Querist :
Anonymous
(Querist)
23 April 2012
we have filed return of PHM by showing income at 70% u/s 44AD itr 4s.
Now it is proposed to amend 44AD SO that it 44AD not applicalble to those who have received commission / brokerage with retrospective effect.
what is the fate of assessee under above circumstances?
is it fair to make such amendment retrospectively.
we prefered 44 AD to overcome tax audit and scrutiny assessment.Now suddenly this retrospective amendment.
now what are options? can they impose penalty for non maintainace of books?
are we going to win appeal ?
kindly advise with case laws if any
Now it is proposed to amend 44AD SO that it 44AD not applicalble to those who have received commission / brokerage with retrospective effect.
what is the fate of assessee under above circumstances?
is it fair to make such amendment retrospectively.
we prefered 44 AD to overcome tax audit and scrutiny assessment.Now suddenly this retrospective amendment.
now what are options? can they impose penalty for non maintainace of books?
are we going to win appeal ?
kindly advise with case laws if any
19 July 2024
Given the scenario you've described, here are the key points and considerations:
### Section 44AD and Commission Income
1. **Applicability of Section 44AD**:
- Section 44AD of the Income Tax Act provides for presumptive taxation for certain businesses, including those engaged in commission or brokerage. As per the current provisions, a taxpayer can declare 8% or 6% (if receipts are through digital means) of gross receipts as their income under Section 44AD.
2. **Income Declaration**:
- PHM, your client, received a commission of Rs. 3,48,600. Under Section 44AD, he can declare his income at 8% of the gross commission received, which amounts to Rs. 27,888.
3. **Precautions to Take**:
- Ensure that all credits in PHM's bank accounts related to the business are properly accounted for.
- Investments made by PHM should also be appropriately documented to substantiate the source of funds and their utilization.
- Although fruits are exempt from VAT, ensure compliance with other applicable tax laws and regulations.
### Retrospective Amendment and Potential Impact
1. **Proposed Amendment**:
- There is a proposed amendment to Section 44AD that may exclude taxpayers who earn commission or brokerage from its purview, with retrospective effect. This means that if the amendment is passed, it could affect PHM's ability to use Section 44AD for the current and past assessment years.
2. **Impact on PHM**:
- If the retrospective amendment is implemented, PHM may no longer be eligible to use Section 44AD for the commission income received. This could lead to a requirement for regular maintenance of books of accounts and potential scrutiny assessments.
3. **Fairness of Retrospective Amendments**:
- Retrospective amendments can be controversial as they change the rules after the fact, affecting taxpayers who made decisions based on the existing law. The fairness of such amendments is often debated, and courts have sometimes intervened to protect taxpayer rights.
4. **Options and Penalties**:
- If PHM is affected by the retrospective amendment, options could include:
- Challenging the amendment through legal recourse, citing fairness and the principle of legitimate expectation.
- Adapting to the new requirements, such as maintaining books of accounts and potentially facing scrutiny assessments.
- Penalties for non-maintenance of books could be levied if PHM fails to comply with statutory requirements under the changed provisions.
5. **Legal Recourse and Case Laws**:
- To contest the retrospective amendment, precedent-setting case laws where courts have protected taxpayer rights against arbitrary changes in tax laws can be cited.
- Seek advice from a tax consultant or legal expert specializing in tax law to assess the specific implications and potential legal strategies.
In conclusion, while PHM currently benefits from the presumptive taxation scheme under Section 44AD, the proposed retrospective amendment could alter this scenario. Preparation for potential changes, including compliance with regular tax requirements if Section 44AD is no longer applicable, is advisable. Seeking professional advice on specific legal options and strategies based on the latest developments in tax law would be prudent in PHM's case.
### Section 44AD and Commission Income
1. **Applicability of Section 44AD**:
- Section 44AD of the Income Tax Act provides for presumptive taxation for certain businesses, including those engaged in commission or brokerage. As per the current provisions, a taxpayer can declare 8% or 6% (if receipts are through digital means) of gross receipts as their income under Section 44AD.
2. **Income Declaration**:
- PHM, your client, received a commission of Rs. 3,48,600. Under Section 44AD, he can declare his income at 8% of the gross commission received, which amounts to Rs. 27,888.
3. **Precautions to Take**:
- Ensure that all credits in PHM's bank accounts related to the business are properly accounted for.
- Investments made by PHM should also be appropriately documented to substantiate the source of funds and their utilization.
- Although fruits are exempt from VAT, ensure compliance with other applicable tax laws and regulations.
### Retrospective Amendment and Potential Impact
1. **Proposed Amendment**:
- There is a proposed amendment to Section 44AD that may exclude taxpayers who earn commission or brokerage from its purview, with retrospective effect. This means that if the amendment is passed, it could affect PHM's ability to use Section 44AD for the current and past assessment years.
2. **Impact on PHM**:
- If the retrospective amendment is implemented, PHM may no longer be eligible to use Section 44AD for the commission income received. This could lead to a requirement for regular maintenance of books of accounts and potential scrutiny assessments.
3. **Fairness of Retrospective Amendments**:
- Retrospective amendments can be controversial as they change the rules after the fact, affecting taxpayers who made decisions based on the existing law. The fairness of such amendments is often debated, and courts have sometimes intervened to protect taxpayer rights.
4. **Options and Penalties**:
- If PHM is affected by the retrospective amendment, options could include:
- Challenging the amendment through legal recourse, citing fairness and the principle of legitimate expectation.
- Adapting to the new requirements, such as maintaining books of accounts and potentially facing scrutiny assessments.
- Penalties for non-maintenance of books could be levied if PHM fails to comply with statutory requirements under the changed provisions.
5. **Legal Recourse and Case Laws**:
- To contest the retrospective amendment, precedent-setting case laws where courts have protected taxpayer rights against arbitrary changes in tax laws can be cited.
- Seek advice from a tax consultant or legal expert specializing in tax law to assess the specific implications and potential legal strategies.
In conclusion, while PHM currently benefits from the presumptive taxation scheme under Section 44AD, the proposed retrospective amendment could alter this scenario. Preparation for potential changes, including compliance with regular tax requirements if Section 44AD is no longer applicable, is advisable. Seeking professional advice on specific legal options and strategies based on the latest developments in tax law would be prudent in PHM's case.
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