Section 44ab audit applicability
This query is : Resolved
30 December 2011
I have query on sec 44AB.
This section says that: Every person,—
(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds sixty lakh rupees in any previous year ; or
(b) carrying on profession shall, if his gross receipts in profession exceed fifteen lakh rupees in any previous year; or
(c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under [section 44AE ] [or section 44BB or section 44BBB], as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any [previous year; or
(d) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.
get his accounts of such previous year audited by Chartered Accountant.
Query: I think if the "person" full fills any of the condition he shall be liable for Audit u/s 44AB for all the income taxable under the head Business or Profession, the scenario can be:
1) Business receipt 50 Lakhs and Profession receipt say 15 Lakhs. Audit applicable for Business and Profession both due to professional receipt.
2) Business receipt 60 Lakhs and Profession receipt say 10 Lakhs. Audit applicable for Business and Profession both due to business receipt.
3) If the assessee show the income lower than amount specified u/s 44AD, 44AE and his business receipt is 20 lakhs and profession receipt is 10 lakhs. Audit applicable for Business (other plus specified business) and Profession both due to income less than as specified under section 44AD/44AE.
The reason for the query is that the section says that the books of account shall be audited. Refering to section sec 44AA. I think that audit will be applicable in the above scenario.
This section says that: Every person,—
(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds sixty lakh rupees in any previous year ; or
(b) carrying on profession shall, if his gross receipts in profession exceed fifteen lakh rupees in any previous year; or
(c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under [section 44AE ] [or section 44BB or section 44BBB], as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any [previous year; or
(d) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.
get his accounts of such previous year audited by Chartered Accountant.
Query: I think if the "person" full fills any of the condition he shall be liable for Audit u/s 44AB for all the income taxable under the head Business or Profession, the scenario can be:
1) Business receipt 50 Lakhs and Profession receipt say 15 Lakhs. Audit applicable for Business and Profession both due to professional receipt.
2) Business receipt 60 Lakhs and Profession receipt say 10 Lakhs. Audit applicable for Business and Profession both due to business receipt.
3) If the assessee show the income lower than amount specified u/s 44AD, 44AE and his business receipt is 20 lakhs and profession receipt is 10 lakhs. Audit applicable for Business (other plus specified business) and Profession both due to income less than as specified under section 44AD/44AE.
The reason for the query is that the section says that the books of account shall be audited. Refering to section sec 44AA. I think that audit will be applicable in the above scenario.
30 December 2011
You are thinking positively. Tax Audit is applicable in all the cases.
Now try to reply this query also.
1. Business Income shown @ 8% on turnover of
Rs 20.00 lac. Gross Professional Receipts of the said assessee is 20.00 lac. Tax Audit will be applicable or not ?
Now try to reply this query also.
1. Business Income shown @ 8% on turnover of
Rs 20.00 lac. Gross Professional Receipts of the said assessee is 20.00 lac. Tax Audit will be applicable or not ?
31 December 2011
I think the audit will be applicable for Professional case as the gross professional receipt has exceed 15 lacs. Further the business income shown at 8% will also will come under the perview of the audit. However I think you have to look who the assessee is and whether the assessee is taking the benefit u/s 44AD.
So if the benefit of sec 44ad is not availed then the business gross receipt will subject to audit.
If the benefit of sec 44ad is taken then the business income subject to 44ad will not be considered for audit, as the income is 8% of gross receipt. Also reason is that as per sec 44AA the books of account in case of sec 44AD is not required to maintain if the income is not less than specified in the (respective) sec. So books of account for sec 44AD will be excluded from the perview of the audit.
Thanks for affirming the original statement.....!
So if the benefit of sec 44ad is not availed then the business gross receipt will subject to audit.
If the benefit of sec 44ad is taken then the business income subject to 44ad will not be considered for audit, as the income is 8% of gross receipt. Also reason is that as per sec 44AA the books of account in case of sec 44AD is not required to maintain if the income is not less than specified in the (respective) sec. So books of account for sec 44AD will be excluded from the perview of the audit.
Thanks for affirming the original statement.....!
31 December 2011
Nicely explained Sir. You are right.
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