08 December 2010
I HAD A CONFUSION REGARDING BALANCE SHEET PREPARATION FOR SEC 44AE THOUGH IS IN NOT REQUIRED AS PER INCOME TAX ACT, BUT I WANT TO PREPARE IT FOR MY SUBSEQUENT REQUIREMENT, I AM CONFUSED AS WHEN I TAKE PRESUMPTIVE INCOME, I NEED TO ADD IT TO CAPITAL A/C AND ON ASSET SIDE ACTUAL FIGURES OF BANK & CASH A/C, IN THIS CASE B/S WILL NEVER TALLY, THEN HOW TO TREAT THIS.
10 December 2010
Dear, if you know the basics of accounting, you will never be confused. You should transfer the difference between presumptive income and actual net profit to Capital Account as follows: a) If presumptive income is less than actual net profit, add the difference to Capital Account. b) If presumptive income is more than actual net profit, deduct the difference from Capital Account.
12 December 2010
Assessee at his option can declare either presumptive income or higher income. Of course it is tax effective to declare presumptive income. Don't worry if profit is higher, you can declare presumptive income. In case you have more doubts, I suggest you to refer to the CA Institute's Member's Journal for Decemeber, 2010 to better grasp this topic.
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