Section 44ad urgent

This query is : Open

Hari Om (Querist)
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31 August 2012 Dear Experts,
There is an assessee( individual trader), whose gross profit in AY 2012-13 is coming to Rs. 45000/- as per accounts on the sales of 23 lacs. Despite that whether still he can opt section 44AD by declaring net profit Rs. 184000/- or not?

Please advise me.

CA Rinkal

CA Rinkal (Expert)
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31 August 2012 Yes he can opt to show profit amount to rs. 184000 as the profit is 8% of total turnover.

Provision says that it is compulsory to show minimum NET PROFIT amount to 8% of the total turnover, if the assessee want to declare lower profit than 8% of total turnover, he has to audited his accounts under section 44AB by chartered accountants. This provision is applied if the total net profit declared u/s. 44AD is exceed the minimum amount which is not chargeable to tax.

Hari Om

Hari Om (Querist)
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31 August 2012 actually, besides this business, assessee also has life insurance agency and commission is about Rs. 10 lacs and net surplus coming thereon is coming to 2 lacs. If we add 45000/- + 2 lacs then it becomes a audit case as assessee crossing the limit of 180000/-.
Therefore I wisht to take his trading income in 44AD and remain is as account case. Hence I dont have to go for audit.

Please reply soon.

CA Rinkal

CA Rinkal (Expert)
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01 September 2012 section 44AD to clarify that this presumptive scheme is not applicable to
(i) a person carrying on profession as referred to in sub-section (1) of section 44AA;
(ii) persons earning income in the nature
of commission or brokerage income; or
(iii) a or a person carrying on any agency business
So, Commission income will not consider for the profit shown u/s. 44AD. that will shown separatly.

Hari Om

Hari Om (Querist)
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01 September 2012 yes, I have shown trading business in 44ad and commission business as non 44ad.

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