Section 44ad


(Querist)
21 June 2019
During the financial year 2017-18, the Client was opted Section 44AD – Presumptive Scheme, but during the financial year 2018-19, his business nature changed from trading to commissioned income. but section 44AD is not applicable on commission income.
Is this sub-section (4) and sub-section (5) of 44AD applicable or not?


CA R SEETHARAMAN (Expert)


Click to Talk 21 June 2019
Not applicable as commission business is not an eligible business.

Deepak Kumar (Querist)
21 June 2019
Dear Sir,
During the financial year 2017-18, the income source from trading business, So the Client was opted Section 44AD – Presumptive Scheme in F.Y 2017-18.
But during the F.Y 2018-19 his business nature has changed from trading to commissioned income.

Is this sub-section (4) and sub-section (5) 44 AAD applicable in this case or not ?

CA R SEETHARAMAN (Expert)


Click to Talk 21 June 2019
Commission income not eligible for presumptive taxation.

Deepak Kumar (Querist)
21 June 2019
I agree with you that the income of the commission is not eligible for this scheme. But last year (F.Y 2017-18) the customer revenue source was trading. Therefore, itr was filed under seciton-44ad.
During F.Y 2018-19, the source of income is only commissioned. But as per section 44ad the commission income is not eligible for presumptive scheme. In this situation, we can only file ITR-3.
But as per rule of section 44ad- presumptive scheme can be opted for 5 years. if we don't continue for 5 years, then additional condition has been added by substituting sub-section (4) and sub-section (5) of 44AD.
Because the income source of the commission in F.Y 2018-19, we can’t opt for presumptive scheme and we need to file ITR-3.
In this case, the sub section (4) and sub-section (5) should be applied or not ?

CA R SEETHARAMAN (Expert)


Click to Talk 21 June 2019
Yes it could not be applied.

Deepak Kumar (Querist)
21 June 2019
Do you mean that sub-section (4) and sub-section (5) will not apply ?

Deepak Kumar (Querist)
21 June 2019
Do you mean that sub-section (4) and sub-section (5) will not apply?

please explain

CA R SEETHARAMAN (Expert)


Click to Talk 21 June 2019
Yes it will not apply.

Commission income not eligible for presumptive taxation hence not apply.


Deepak Kumar (Querist)
22 June 2019
Dear Sir
But according to rule 44ad, if we do not continue for the next five years, then sub-section (4) and sub- Section (5) will be applied.
So please explain why sub-sections (4) and sub-sections (5) are not applicable ?

CA R SEETHARAMAN (Expert)


Click to Talk 22 June 2019
If you are eligible for 44AD and do not continue then only sub-sections (4) and sub-sections (5) are applicable.
Here you are not eligible for 44AD option.

Deepak Kumar (Querist)
22 June 2019
Dear Sir,
But if the source of income will change in the next financial year (2019-20) from commission to other service sector. In this situation, income tax return can be filed under section 44AD or not ?

CA R SEETHARAMAN (Expert)


Click to Talk 22 June 2019
In case of eligible business yes.

Deepak Kumar (Querist)
22 June 2019
In this case, the next five years will be calculated from the financial year 2017-18 or the financial year 2019-20 ?

Deepak Kumar (Querist)
25 June 2019
Please reply if possible ?

CA R SEETHARAMAN (Expert)


Click to Talk 26 June 2019
From 2019-20........................

Deepak Kumar (Querist)
26 June 2019
thank you so much sir ji


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