Presumptive tax u/s 44ad

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hitesh (Querist)

08 August 2014 If an assessee having multiple businesses and the result are as under:
In Business A, sales t.o. is Rs.40 lakhs and net profit is Rs.11 lakhs.
Business B, sales is Rs.7 lakhs and loss of Rs.1 lakh. Now the question is: which of the following is correct
1)Profit u/s 44ad is to be calculated business wise, i.e Business A Rs.3.2 lakhs + Business B Rs.0.56 lakhs= Rs.3.76 lakhs or
2) Business A Rs.11 lakhs+ Business B Rs.0.56 lakhs= Rs.11.56 lakhs.
If assessee maintains books, and the profit is more than 8% (as in case of Business A above)is it mandatory to declare higher profit? or is it a condition that assessee must not maintain books? Refer Shivani Buliders Vs. ITO (2007) 295 ITR(AT)281

Rupesh Jain

Rupesh Jain (Expert)

09 August 2014 IF YOU NOT MAIntain the book of a/c the you can declare profit u/s 44AD @ 8% of the turnover . it is minimum profit you can declare more profit .

CA Vipul Suthar

CA Vipul Suthar (Expert)

09 August 2014 I agree with Rupesh Jain, but I want to add something to his answer that it is advisable to show total turnover of both the business i.e. 40+7=47 and profit on presumptive basis i.e. 11-1=10 means 21.28% of 47 lacs.

hitesh

hitesh (Querist)

09 August 2014 I know minimum 8% is to be declared. The question is whether non maintenance of books is pre condition? A businessman with T.O.of say Rs.1.00 crore would obviously have some books, to file vat /cst returns, ledger of debtors/ creditors, bank book,(To borrow Rs.10 lacs or more banker need financial statements) stock records etc. If this the condition, 44ad is meaning less. U can not say I am filing vat/cst returns out of air, sending communication to debtors/ creditors from out of my memory!! The second q is whether 44ad is business based or assessee based?
The deduction is business based and not assessee based. It may not be right to club the T.O. Whereas Sec 44AB is assessee based and u have to club the T.O. to ascertain whether 44AB is applicable. Here it is not the case. Each eligible business has to declare 8% profit.

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