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?
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 ?
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 ?
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 ?
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.
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 ?
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