Section 44 ad (5)

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2011 Can any one pls explain the said sub clause of 44AD which says that Audit can be done only if I have declared less than 8% and my total income is more than 1,60,000/- but what if I declare less than 8% and my total income is less than 1,60,000/- then am I subject to audit or not as the sub section says

less than 8% and total income more than 1,60,000 subject to audit and if not then what is the position pls clarify.

Thanks in advance.

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)

10 August 2011 If Profit < 160000 and Profit < 8%, then no need to get audit as per the law which seems a bit illogical. But that is what the law is saying and you can follow it.

Querist : Anonymous

Querist : Anonymous (Querist)

11 August 2011 but then waht is the use of 8% logic even a trades with 55 lacs turnover will declare a profit less than 1.6 lacs and will not even file the return of Income assuming he has only one source of income.

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)

11 August 2011 That is what i am saying dear that it becomes a bit illogical at some places.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

11 August 2011 The purpose of sub-section (1) seems to be defeated by the drafting mechanism of sub section (5) as it starts with the clause -
" Notwithstanding anything contained in the foregoing provisions of the section..."
.

But the absence of the phrase " to the contrary " between the words 'anything' and 'contained' creates suspicion.

The drafting difference can be perceived from subsection (1) of Section 44AD(1) itself where the initial para has been drafted by using " to the contrary" .
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So , it is advisable to take calculated risk on the basis of Section 44AD(5).
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