Section 44ad

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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)
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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%?