Section 44ad(5)

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champak (Querist)

28 February 2013 1) firm is having sales of rs.10 lakhs
2) it is in retail busines
3) there is loss of rs.13000/- during the yr

as per 44ad (5) if assessee claims profit lower than 8% and if its income exceeds the maximum amt (for individuals it is rs.180000/- for A.Y 12-13 but for firms it is rs.0/-) which is not chargeable to tax then is the firm liable for audit u/s 44ab
please guide me in this matter
thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

28 February 2013 Tax Audit is not required in this case.
.
However, a better way to present this case is -show 8% profit -which is before interest and remuneration to partners. Distribute the same as interest and salary and show Nil Income of the firm.
.

champak

champak (Querist)

01 March 2013 thanks for ur valubale advice..... but how can profit be nil after remuneration and interest to partners...as int @12% is okkkk but with respect to remuneration it is maximum @90% of book profit before deducting remuneration.
for example :-
8% profit of turnover comes to rs.1 lakh
interest on capital is rs.60,000/-
then maximum remuneration comes rs.36000/- (90% of rs.40000/-)then my taxable profit is rs.4000/-.........is the above calculation correct.please guide
thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

01 March 2013 Upto 150000/- of Book Profit, entire amount can be given as remuneration. So inspite of 90% you may provide 100% remuneration i.e.
40000/-.

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