SECTION 44AE

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Khan Ibrahim (Querist)

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.

THANKS FOR YOUR REPLIES

CA Navin Jain

CA Navin Jain (Expert)

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.

Khan Ibrahim

Khan Ibrahim (Querist)

10 December 2010 sir you mean to adjust the difference in capital a/c

CA Navin Jain

CA Navin Jain (Expert)

11 December 2010 Yes...

Message likes : 1 times

Khan Ibrahim

Khan Ibrahim (Querist)

11 December 2010 EVEN I THOUGHT OF THE SAME BEFORE BUT NOT SURE FOR THIS

THANKS A LOT SIR

Khan Ibrahim

Khan Ibrahim (Querist)

11 December 2010 SIR IF WE KNOW THAT PROFIT IS MORE THAN THE PRESUMPTIVE INCOME, WHICH INCOME SHOULD WE TREAT FOR INCOME TAX PURPOSE

WEATHER IT IS MANDATORY TO GO FOR HIGHER INCOME OR IT IS UP TO US TO DECLARE ANY ONE FROM PRESUMPTIVE INCOME OR HIGHER AS PER P&L

CA Navin Jain

CA Navin Jain (Expert)

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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