Section 44ad

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 March 2012 Dear sir,
I am a tyre dealer, and want to opt sec. 44AD in AY 2011-12.
At the time of inception, I had to deposit security amount of Rs. 5 lacs, to obtain tyre dealership, at my principal company. And the tyre company paying interest(after deducting TDS) quarterly on that security amount on the following basis -
1. for business performance below the average - @ 6% per annum.
2. for average business performance - @ 12% per annum.
3. for business performance above average - @ 18% per annum.
In the above case, my sales are Rs. 45 lacs and total interest received during the FY is Rs. 18000/-.
Hereby, I would like to know that, what would be considered as my gross receipt - Rs. 45 lacs + 18000/- or only Rs. 45 lacs?
And
What would be my net profit u/s section 44AD among the followings -
1. Rs. 360000/- only (calculated @ 8% on total sales.
or
2. Rs. 360000/- + 18000/- = 378000/-
or
3. Rs. 360000/- as net profit
Rs. 18000/- to show in the head of income from other sources.
Please advise me.

CA. Nitin Agrawal

CA. Nitin Agrawal (Expert)

04 March 2012 In my view, the interest earned is from the deposit with the company & related to the business hence the same would be considered as turnover.

So the taxable income will be as under:
(4500000+18000)* 8.24% = 37,2283/-

Other Interest not related with business will be taxed separately under Income from other Sources & not considered as turnover.

Other experts opinion sought for confirming/ correcting my view.

regards

Querist : Anonymous

Querist : Anonymous (Querist)

04 March 2012 Sir, I want to know that, why did you calculat net profit @ 8.24% instead of 8%?