Section 44ad conflicting.

This query is : Resolved

Mukesh Mittal (Querist)
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03 March 2013 Sec 44AD(5) says in case:
"Income below Basic Exemption Limit,
then no need to get books of Accounts Audited".

Case I:
Gross Receipt : Rs.99,99,999/-
Expenditure : Rs.99,00,000/-
Net Profit : Rs. 99,999/-

1.Should the Assessee file the return of Income ?

2.Should the Assessee get his books of Accounts Audited u/s 44AB ?

3.Is the Assessee liable to Maintain books of Accounts u/s 44AA ?

kindly Suggest...

Any answers other than Rs.99,99,999 * 8% = 7,99,999.92

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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03 March 2013 Section 44AD(5)is really a surprising section and a lot of discussion had already been made by the experts in CACLUB.
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The assessee has been provided proper safeguards as the language used in all the 3 sections you have referred, is similar.
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The days are not far ahead when our honourable courts will be requested to interpret the section.
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Looking to the intention of law the words used as " whose total income exceeds the maximum amount which is not liable to income tax" are likely to suffer a jolt.
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These may suitably be amended so as to clearly say that by applying 8% criteria " whose total income exceeds the maximum amount which is not liable to income tax" .
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Mukesh Mittal

Mukesh Mittal (Querist)
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04 March 2013 thanks sir for your kind reply.

In above case as per 44AD(5) there is no need to file return of income but
As per S.44AA he is liable to maintain books of Accounts.

Am i right sir ? please inform.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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04 March 2013 Yes you are right. The law prescribed U/s 44AA(2) (i) & (ii) makes the maintenance of
Books of Account compulsory.
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Section 44AD also does not provide full liberty to the assessee as no where in the section it has been mentioned that books of account are not required to be maintained.
.

Mukesh Mittal

Mukesh Mittal (Querist)
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05 March 2013 Thanks sir. just one last clarification.

can this be assumed that

if a person is not covered by S.44AD(5)
(like in the above case)
then he will automatically get liable to be covered by S.44AD(1) i.e. at 8%.

then this sec.44AD(5) stands correct, and there is no room for any doubt in it.

is my conclusion correct Sir ? please advise.