Section 44ad query

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$ achin @grawal (Querist)
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19 September 2013 section 44AD (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligibleassesseewho claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) ofsection 44AAand get them audited and furnish a report of such audit as required undersection 44AB Now my query is as under: turnover:50,00,000 8 percent is 4,00,000 I.e. greater than basic exemption limit actual profit shown: case1: rs. 1,60,000 I.e. less than 8 percent of turnover case2: rs. 2,10,000 I.e. less than 8 percent of turnover in which case is assessee required to get tax audit done u/s 44ab ? pls suggest to the point with proper interpretation.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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20 September 2013 Dear Sachin.

No. In case income determined is less than the exemption limit, no tax audit is required.

Needless to say that it shall be open for the AO to verify your claims.

With regard to interpretation, for the tax audit to apply, two conditions need to be satisfied cumulatively: 1. profit less than 8% and profit more than exemption limit.

If any of the condition is not satisfied, tax audit is not triggered.

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