Interpretation of Section 44AD of the Income Tax Act,1961

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Nandini Rao (Querist)
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23 July 2011 Section 44AD of the Income Tax Act, 1961 states
(1)"Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business,a sum equal to eight per cent of the total turnover or gross receipts of the assessee for the previous year on account of such business or, as the case may be, a sum ......."
In this case, what would be the proper meaning that can be attached to the phrase "as the case may be" for interpreting the said section?
Will this include professional services provided by the eligible assessee?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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23 July 2011 Case-1 - Show 8% or Income
Case-2 - Show higher than the sum as shown in Case1

so " as the case may be" can be interpreted as "or" between the two cases creating a choice between the 2.

However,

Case-1 - Show 8% or Income is mandatory.
Case-2 - Show higher than the sum as shown in Case -1 is either at the will
when income is below 8% and shows compulsion when the income is definitely at higher side.

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CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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24 July 2011 Consider the following cases:

Turnover 5000000

Case 1: NP 200000
Case 2: NP 500000

Now if you want to take benefit of Section 44AD then:

In case 1 you have to claim your profit as minimum of 400000. ( i.e. 8% of turnover)

In case 2, as your profit is already higher than 8%, then you can claim your actual profit.

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