Interest u/s 234 if assessable u/s 44ad
This query is : Resolved
30 November 2012
I am a Article Student.
One of our client is assessable U/s 44AD. But then the client got the notice U/s 143(1) demanding an amount payable. On persual it was noticed that he was levied Interest U/s 234B, 234C for non-payment of advance tax. The Assessment year of the notice is 2011 - 12. There is a rule that Assessee is not liable for Advance Tax if he is assessable U/s 44AD. Then why was the demand raised by the Department. Please if possible answer this query of mine with the valid proof say a notification of the above rule.
Thank you.
One of our client is assessable U/s 44AD. But then the client got the notice U/s 143(1) demanding an amount payable. On persual it was noticed that he was levied Interest U/s 234B, 234C for non-payment of advance tax. The Assessment year of the notice is 2011 - 12. There is a rule that Assessee is not liable for Advance Tax if he is assessable U/s 44AD. Then why was the demand raised by the Department. Please if possible answer this query of mine with the valid proof say a notification of the above rule.
Thank you.
30 November 2012
Section 44AD(4)
“The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business.”
Chapter XVII-C deals with provisions relating to Advance Payment of Tax.
On plain reading of this subsection, we conclude that eligible assessees are exempt from payment of Advance Tax.But the second part of Provision creates a blunder so far it relates to eligible business, which creates lot of doubt.
The following example will better clear your understanding :
Profit under section 44AD Rs 4.00 lac
Say Turnover is RS.50 lakhs)
Interest Income Rs.5.00 Lac
Total Income Rs.9.00 lac
In this situation, whether the assessee is exempted from provisions of advance tax in all or whether the assessee is liable to Pay advance Tax on interest income of Rs.5.00 lac.
From the understanding of Law, it is clear that the assessee have to pay advance tax on interest income of Rs.5.00 lac.
But how this tax calculation is to be made is no where define in legislature?
“The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business.”
Chapter XVII-C deals with provisions relating to Advance Payment of Tax.
On plain reading of this subsection, we conclude that eligible assessees are exempt from payment of Advance Tax.But the second part of Provision creates a blunder so far it relates to eligible business, which creates lot of doubt.
The following example will better clear your understanding :
Profit under section 44AD Rs 4.00 lac
Say Turnover is RS.50 lakhs)
Interest Income Rs.5.00 Lac
Total Income Rs.9.00 lac
In this situation, whether the assessee is exempted from provisions of advance tax in all or whether the assessee is liable to Pay advance Tax on interest income of Rs.5.00 lac.
From the understanding of Law, it is clear that the assessee have to pay advance tax on interest income of Rs.5.00 lac.
But how this tax calculation is to be made is no where define in legislature?
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
- TDS CREDIT MISMATCHING
- Buy back of shares u/s69
- ITDS U/S.194T of Firm
- Difference between Date of Payment and Date of Deduction?
- Unregistered suppliers utility
- Tax Audit Applicability – Newly Formed Partnership Firm with Profit Below 6%/8%
- URGENT-Eligible leaves being shown as 24 days for 3 years Articleship instead of 156 days in 108
- TDS AND ITR ISSUE
- EXPORT COMMERCIAL INVOICE HSN CODE
- Bank details not Visible on Traces Portal
- Non-Compliance documents have not been submitted by the contractors debited
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
- LLP audit under companies act
- Experienced CA recommendation from Kolkata for FNO return filing
- Interest Reporting in Form 168
- Sales of goods of amount Rs77 lakhs to a party
- Tax Demand of ₹4,650 for AY 2026-27
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
