Section 44ad urgent

Save Share

This query is : Open

Hari Om (Querist)
Follow

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)
Follow

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)
Follow

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)
Follow

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)
Follow

01 September 2012 yes, I have shown trading business in 44ad and commission business as non 44ad.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now